Officially, if you are a foreign passport holder you need a Residence Permit for China. And you must purchase in your own name, for use as your primary residence. You may not rent/lease it out. Foreigners who wish to purchase property for investment/income purposes must form a local company for this purpose and can then put the property in the company's name. This is the summary version of the official regulations.

As this particular set of regulations only came about in 2006, there isn't a large body of evidence yet on what happens when foreigners lease out their property for income and get caught. Up to about 2007, it was easy to take advantage of bureaucratic chaos and get lost in the shuffle, since there was not a lot of coordination between property offices, tax bureau, immigration/visa/police authorities, etc. However, now there is computer interconnection between these systems, so if the Chinese choose to cross-connect all the dots, they could with reasonable ease find out which foreigners are owners, residents, renting out to others, etc.

Those who are ethnic Chinese and have Hong Kong or Taiwan residence papers have a little bit different set of rules applied to them (officially or unofficially) and have more leeway.

You must consider the fact that RMB is not a convertible currency and is not likely to be in the foreseeable future. This has implications for how you pay for a property, collect rents and recycle the RMB, get cash/sale proceeds back into hard currency and out of China, etc. You must research and get expert advice on this issue before proceeding with any plan to buy.

Then--regulations aside--there is the straight business issue of being able to rent out your property for an amount that covers your expenses. That is less predictable. Right now in many first-tier cities (including Beijing), market rents for upscale apartments generally aren't covering (or barely covering) basic landlord expenses: mortgage, management fee, heating fee, taxes, etc. So it's possible you'd have to depend on capital appreciation alone to break even/make profit. Property prices are just too high for what the market will support, and the common wisdom here is there is a gov't-developer-propped up bubble in many big cities, esp in higher-end residential property. Take heed of what has happened in the US, UK, and other places in the last year or so. China is not immune to same. You have been warned.