Is Housing Reform Necessary?
Housing Reform Faces Obstacles
Housing reform, acknowledged by economists and
politicians at home and abroad as central to China's economic reform, has
reached a critical stage.
A recent article in the overseas edition of the
magazine Outlook remarked that China's housing reform is facing five
obstacles. Major breakthroughs will surely come if these knotty problems
are carefully and properly handled.
Firstly, the old attitudes of the bulk of urban
employees that it is the State's duty to provide shelter as a kind of
social welfare has adversely affected their enthusiasm for participating
in housing reform.
Most people don't include housing on their shopping
list. They think that they deserve State housing no matter how little they
may have contributed towards it.
Some of them consider commercialization or
privatization of housing as being synonymous with taking money out of
people's pockets and so running counter to the ideals of socialism.
Secondly, the little money that workers, enterprises
and governments at all levels have has affected the accomplishment of
The per-capita monthly earnings of not more than 80
yuan in China's urban areas plus the continuous price hike of recent years
has greatly lowered the citizens' ability to pay extra to buy a house and
has reduced their incentive.
It is difficult for enterprises to earmark large sums
to support housing reform since many of them are not profitably run. The
State, already in deficit, finds itself unable to subsidize the reform.
Thirdly, the current housing reform will encounter
social risks since those vested interest holders, most of them senior
cadres, stand in the way of the restructure.
Fourthly, the rocketing price of housing has
tremendously dampened the enthusiasm of potential house buyer. In some
large cities such as Beijing and Shanghai, the price has surged to record
heights of around 2,000 yuan a square metre.
Finally, the overall social reform environment has
slowed the pace of housing reform. The present relationship of cost,
wages, finance and social welfare system reforms has stemmed the housing
reform since they are closely integrated.
Based on the preceding problems, the article puts
forward several suggestions on how to resolve them.
First of all, there should be more publicity to
encourage urban dwellers to give up their stereotype thinking that housing
is social welfare right guaranteed by the State.
Commercialization of housing may be achieved through
several different phases.
The idea of carrying out the housing reform at one
stroke should be abandoned.
Housing reform should be implemented in conformity with
the country's wage, price and other related reforms. The State Council
should pressure local governments--especially those that are dragging
their feet - to speed up their housing reform when necessary, but meantime
it should promise to share sorne of the risks local authorities will face.
So quite a few obstacles have emerged and the decision
makers should do some hard thinking to determine the correct course of
These were the opinions aired by dozens of experts and
economists on construction and housing reform who have been summoned
recently to a meeting in Beijing by the Ministry of Construction, to
coincide with the World Habitat Day on October 2.
II . Read
Read the following passages. Underline the important
viewpoints while reading.
1. Encouraging Atmosphere for Housing Reform
The current atmosphere in respect of reform in housing
is still encouraging, the experts and economists said. Despite some areas
and departments having resorted. to the attitude of
"wait-and-see" and even called a halt to housing reform,
attributable to the April-June social unrest, 2G out of the country's 30
provinces, municipalities and autonomous regions are still maintaining
their endeavours adhering to the scheduled restructure.
Out in the main metropolises, Beijing and Tianjin are
experimenting with a reform scenario of "multiple directions",
such as raising rents for public residential housing, encouraging urban
residents to buy more State-built housing, arranging funds to build
commercial high-rises, setting up housing deposit banks and the like.
Shanghai, the largest city in China, is also drafting
its blueprint to quicken the pace of its housing reform in keeping up with
their housing requirements.
In Guangzhou, the provincial capital of Guangdong, an
overall housing reform plan is beginning this month. The municipal
government plan stipulates that all residents living in
non-privately-owned houses, including those owned by the city's real
estate administration departments and by State and collective units, will
have to purchase their dwellings or rent them at a rate set by the
The housing reform characterized by selling of housing
and raising rents will be enormously conducive to the healthy development
of China's economy in all sectors, some economists maintain.
2. Why Is Housing Reform Necessary?
During the past few years, the State has spent 30
billion yuan a year on building and maintaining houses and subsidizing
rents. But as the investment produces little financial return and funds
are tight, housing shortages still persist.
According to calculations by the Leading Group of
Housing Reform under the State Council, if only one half of the
State-built houses nationwide are sold to urban residents, up to 200
billion yuan will be recouped, which can be further used as investments.to
construct more residential dwellings or help the development of other
In this way, the abnormal circle of more house
construction and heavier burdens for the State to shoulder will be
Successful housing reform will have other beneficial
effects on the society.
People buying their own houses will restrain the swelling of consuming
funds and tighten the State,s grip on any panic buying.
And last but not least, commercialization of housing
would stop the practice adopted by some officials of abusing their
position to obtain extra or larger houses.
However, the nationwide situation of housing reform is still rather
critical. Last year, the government forecast of 80 cities mapping out
their scenarios of housing reform was not reached.
3. Tianjin Folks Can Buy Their Own Houses
A double blessing descended upon Wang Jianpo, a worker
at the Tianjin Machine Tool Plant, last month.
He married a beautiful young girl and bought a two-room
flat--a thing considered by many Chinese young men even harder than
finding a wife.
At the wedding ceremony, which took place in the new
flat recently, Wang and his wife presented some wedding candies to the
city leaders to express their gratitude for the government's efforts to
build more housing for sale for local residents.
The young couple is one of the 20, 000 households who
moved into new houses built at their own expense last month.
The State covered the expenses for infrastructures such
as roads linking all the apartment blocks, waterworks and sewers. Nearby
industrial enterprises financed construction of grain shops, groceries and
Construction costs were shared by the local government,
would-be buyers and most local enterprises.
"The method is a good way to speed up urban
housing construction and tallies with the current consumption level of
Chinese urbanites,"said a local government official.
There is no doubt that money collected from house sales will greatly
relieve the shortage of funds for new construction, the official added.
4. Housing Reform in Tianjin
For a long time, China practised. a housing system
under which work units were held responsible for housing their employees,
who paid a nominal rent. Therefore, houses were regarded as State-funded
welfare facilities rather than commodities.
Tianjin is one of the 1? pilot cities chosen by the
State Council to try out the practice of selling government-built
apartments to individuals as part of the country's housing reform. The aim
is to recover part of the construction cost for reinvestment in housing
The city I;as built houses for sale with a total floor
space of 20 million
square metres over the past decade. This has helped raise the per capita
living space of urban residents in the city to 6.4 square metres, double
that of a decade ago.
This year the city has built dwellings for sale
totalling 500,000 square metres. Local residents raised 100 million yuan,
the government invested 25 million yuan and local enterprises provided 75
million yuan to cover the cost of construction.
The cost of every square metre averaged 300 yuan. The
buyers pay 200 yuan for each square metre and the State covers the rest.
Many Tianjin resi.dents are saving money and waiting
for their turn to purchase new houses instead of spending more money on
consumer durables, such as colour TV sets, refrigerators and
video-recorders, as in the past.
Many experts, officials and local residents have called
for an extension of the "tripartite cooperation" in housing
construction- financing by means of individual- raised funds with the help
of the government and enterprises. This is because wholesale
commercialization of housing won't work yet, as only a few people can
afford to buy houses.
The housing cooperatives have turned out to be a
feasible way to get over the impasse. People are more keen to.invest in
their own houses and the State has less of a financial burden.