The Chinese government actively promotes the development of an urban housing security system which includes mainly the system of publicly accumulated housing funds, the system of generally affordable and functional housing, and the low-rent housing system for the purpose of unremittingly improving urban residents’ housing conditions. By the end of 2003, the average floor space had reached 23.7 sq m per capita for urban residents.

The System of Publicly Accumulated Housing Funds

The system of publicly accumulated housing funds is a policy-based financing channel by which the Chinese government tries to solve the housing problem of employees. The funds are gathered monthly from government agencies, public institutions, enterprises, mass organizations, private non-enterprise units and their on-the-job employees in a certain proportion to the employees’ salaries, and such funds belong to individual employees. The publicly accumulated housing funds are deposited in devoted accounts and are used exclusively for employees to purchase, build and renovate their houses, and can be loaned to the employees for these purposes. The publicly accumulated housing funds are characterized by obligation, mutual help and housing security. In 1994, this system was implemented in cities throughout China. In 1999, the state issued the “Regulations for the Management of the Publicly Accumulated Housing Funds,” and reissued them in 2002, to ensure that the system functions in an institutionalized and standardized way. Now, an administrative system has been basically set up, which involves decision-making by the Administrative Committee of the Publicly Accumulated Housing Funds, operation by the Administrative Center of the Publicly Accumulated Housing Funds, deposit in devoted bank accounts as well as financial supervision. The publicly accumulated housing funds can be booked as cost of enterprises, and are exempt from personal income tax. The funds can also enjoy preferential low-interest loan policy. By the end of 2003, a total of 60.45 million employees throughout China had opened accounts for publicly accumulated housing funds, raising a total of 556.3 billion yuan, of which 174.3 billion yuan was withdrawn from the banks by employees for buying or building their houses or for retirement, and a total of 234.3 billion yuan was granted as personal housing loans to help 3.27 million employees’ families to purchase or build houses. The system of publicly accumulated housing funds has played an important role in the improvement of people’s housing conditions.

Generally Affordable and Functional Housing System

In 1998, the Chinese government decided to build generally affordable and functional housing. Affordable and functional housing means housing for which the government provides preferential policies, and sets the construction standards, the selling price and the users’ qualification criteria. It is policy-based, security-type commercial housing. Households meeting the following requirements can apply to buy or rent a suite of such housing: those having local registered permanent residence permits (including servicemen eligible under local resettlement standards) or those specified by the city or county government; those with serious housing problems – without housing of their own or with their current housing space below the standards set by the city or county government; households whose family incomes meet the income standard set by the city or county government; and households meeting other conditions set by the city or county government. A low-profit principle is maintained for such housing when it is sold or rented. Only after a specified length of time following the purchase of such housing may the owner sell it at the market, and a portion of the earnings therefrom must be turned over to the government. The purchase of this kind of housing must be subject to application, examination and public announcement, thus emphasizing public transparency and strict supervision and administration. From 1998 to 2003, the construction of 477 million sq m of such housing space was completed.

The Low-Rent Housing System

Since 1998, the Chinese government has made active efforts to promote the low-rent housing system and to continuously improve housing security policies. Temporary exemption of property tax and business tax is applied to publicly owned housing and low-rent housing lent out at prices prescribed by the government. Under the guidance of uniform state policies, the local governments have set up their own low-rent housing systems for urban minimum-income households in accordance with the level of local economic and social development. Such a housing security system, supported mainly by the government’s financial budget while the low-rent funds are pooled from other channels, is practiced in many ways – with housing rent subsidy as the major form, supplemented by the supply of basic furniture and rent deduction. For households whose incomes and housing space are below the standards set by the local government, the latter should ensure that their basic housing needs are met by application, registration and waiting one’s turn. In 2003, this low-rent housing system for minimum-income families was established in 35 large and medium-sized cities.