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Lesson 20

                        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 housing expectations.

    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 action.
    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 government.
    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 industries.

    In this way, the abnormal circle of more house construction and heavier burdens for the State to shoulder will be resolved.
    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 parks.
    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 construction.

    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.