Opinion
Housing a happy society
By You Nuo (China Daily)
Updated: 2010-03-11 10:12
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The more people are promised a harmonious society, the more sensitive they are to anything that officials say and do that doesn't quite live up to the pledge.
At the same time as China is embarking on an unprecedented program of building cities into which it intends to move up to 300 million rural residents over the next 30 years, officials from the Ministry of Housing and Urban-Rural Development (Mohurd) told people meeting for the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), that they could not have any control over urban property prices.
While house prices in key cities are expected to be on the rise for at least 20 years to come, they admitted, it would remain hard for central government to regulate them because local governments still depend on the auction of land use rights for revenues. It is discouraging, at least on the Mohurd level, that it cannot really do anything useful to police the market or even lead the development of the urban real estate industry.
It sounds like a failure of the State, but it's a reality that development in the past has built a momentum that is not helping development in the future, and certainly not that of a harmonious urban society.
Unless the central government makes up its mind to change the system of public finance at the local level - most importantly with provinces and cities - one or two cabinet ministries are not enough to wrestle with such widespread local interests. So the initiative must come from the premier, who heads the whole cabinet.
It can be a program consisting of several key principles applicable nationwide, mainly to distinguish between housing for investment and for the rich, that for the poor (as a kind of social security), and that for ordinary homeowners, with middle-class homeowners as the primary target group.
Under rising pressure within society - as seen from the frustration and anger among the younger generations - different cities will sooner or later introduce their own differentiation programs. Their programs may vary from one to another if they see the problem in different ways, making a uniform program even harder.
If the central government is not equipped with the proper means to regulate the urban housing market now, as time goes by it would prove even less useful in reacting to public appeals in a market potentially most important for China's future development.
There are economists saying that the main driving engine for this economy has already shifted from export-oriented production to its domestic urban programs. Policy-wise, the greater equality for migrant workers and their children in income, in education, in health care, and in rental terms, once realized, can help the nation's consumer power rise from around 10 trillion yuan ($1.5 trillion) a year at present to 20 trillion yuan ($3 trillion) a year in a decade.
China's low level domestic consumption is usually seen as a result of its slow progress towards urbanization. Despite rapid economic growth in the last 30 odd years, only 45 percent of its population are considered properly urban - with urban household registrations and fully entitled to the better terms of life in the cities, from higher industrial wages (as compared with farming) to various social programs.
If household registration rules are to be relaxed, as the premier promised to the NPC and CPPCC this year, the urban share of the population may expand from 45 percent to 75 percent in 30 years. The change could generate great business opportunities as well as severe social challenges - such as how to avoid having more land disputes, how to help young professionals and workers settle down and build new homes, and how to facilitate neighborhood self-governance. All these require new government programs.
The author is business editor of China Daily.
