Q: China used to allocate housing to city residents as a
welfare benefit, but this has been reformed so that people can now
buy their own homes. What policies has the government adopted for
private housing purchase, and what measures has it taken to help
those who can't afford to buy a home?
A: For some time since the founding of the People's Republic in
1949, China practiced a system to allocate public housing as
welfare benefit to urban dwellers, which on the whole ensured
accommodation for all, though with a low per-capita living
space.
The commercialization of housing distribution is indispensable
to China's transition from a planned to a market economy. In 1998,
China launched the reform of public housing system, replacing the
old, welfare public housing distribution with provision of cash
allowances for home purchase. So far, over 80 percent of the
purchasable public housing has been sold and the housing
privatization rate has reached 72.8 percent. Meanwhile, a new
housing supply system has taken initial shape. Progress has been
made in the construction of affordable housing, the low-rent
housing project has just started, secondary housing market is
opening up, real estate intermediary service and property
management industry have developed rapidly, and a service system
for real estate market has been established. With real estate
investment rising significantly, the residence-centered realty
business has emerged as a pillar industry in the national
economy.
According to the experiences of developed countries, a house is
a relatively expensive commodity. The likelihood of everyone owning
a house remains tiny even in a well-off society. There are bound to
be some low-income families and impoverished people who can't
afford to buy homes. In order to ensure everyone is accommodated,
China has adopted a series of measures in light of its own
conditions:
First, the housing provident fund (HPF). It is a compulsory
housing savings plan with employer matching, which is exempt from
income tax. The HPF system is designed to help ordinary wage
earners with little purchasing power to own their own homes. It is
considered a housing security system that can benefit most of the
salaried class. Besides their savings funds, a purchaser can apply
for a preferential housing loan rate when buying a house.
Second, partially market-based housing security system. By
various means, including reducing the land acquisition fee,
offering land subsidies and tax reductions, local governments
encourage real estate developers to build affordable and low-rent
housing to meet the needs of low-income families.
Third, non-market housing security system. This is designed to help
those who can't even afford to buy a so-called affordable house.
The government supplies them with a low-rent dwelling. As for those
who are too poor to even rent, the government provides relief funds
to solve their housing problems.
China's housing reform, which features the HPF system and the
construction of affordable and low-rent housing, has improved the
housing conditions of urban residents, boosted both investment and
consumption, and fueled job market. By the end of 2003, the
per-capita living space of China's urban and rural residents had
reached 23.7 and 27.2 square meters respectively. Habitat
environment has further improved.
Yet, as a country with such a large population and limited land
resources, China can only afford to ensure housing for a majority
of its people at a relatively low level. We can't compare our
housing conditions and security status with those of the developed
countries. Given the country's limited resources, even when we are
living in a more well-off society, we won't encourage people to
purchase luxury items. Thus the basic principles in our housing
policies remain to save energy and land.
A low-income family in Fujian looks out
from the balcony of their new apartment provided by the local
government. The National People's Congress of China has passed
legislations to offer low-rent housing to needy households in urban
areas.
