China's urban authorities have been ordered to spend 5 percent of their revenues earned through land sales to build low-rent apartments, according to a Ministry of Finance circular, made available to Xinhua Monday.

The circular also requires municipal governments to allocate more funds to low-rent housing in their annual budgets, while the central government is to provide subsidies to local governments for low-rent housing.

Low-rent apartments are an essential part of China's housing security system. They are either built or sourced by the government and provided to poor urban families at discounted rents.

Previously, funds for low-rent housing mainly came from interest earned by the Public Housing Fund, which is a mortgage fund paid by urban employees and their employers who plan to buy their own homes.

According to the Ministry of Construction, the Chinese government has spent only 4.74 billion yuan (US$593 million) on low-rent housing since the early 1990's, benefiting just 329,000 households.

Prior to 1990, apartments were mainly provided by the government or employee work units, which means China has little experience in providing low-income housing since the country's real estate market was reformed to allow private sale and ownership.

As soaring housing prices in major cities have drawn public criticism of the government's housing policy, the Chinese government has recently taken a number of measures to improve its housing security policies.

To date 70 of China's 291 cities at or above prefecture level are not providing low-rent housing. A recent document has ordered the 70 cities to establish a subsidized housing system by the end of 2006.

The new circular from the Ministry of Finance also encourages donations to the system by providing tax rebates to the donors.

(Xinhua News Agency July 18, 2006)