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Habitat International 30 (2006) 275–276

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Editorial

Affordable housing in China

Introduction

China has the largest population in the world. The nation has a tremendous task in providing
decent housing for its entire people at an affordable price, particularly for people in cities.
Housing is not only a key concern among researchers, but also for policy makers on the
Mainland. Since the initiation of its ‘Open Door Policy’ in 1978, China has demonstrated a
notable policy shift, from a planned economy to what one may call a ‘socialist market’ regime.
Housing reform was also started soon after the State Council issued a policy paper entitled
‘Implementation Plan for Nationwide Urban Housing Reform by Stages and by Groups’. This
marked an important step forward in the history of China’s affordable housing.
Prior to urban housing reform, most Chinese people lived in rented accommodation provided
by state agents—namely local governments, state-owned enterprises (SOEs) and work units.
Tenants paid only a nominal rent to the housing providers. This, however, proved neither
financially viable, nor sustainable. Housing reform was put in place by central government. New
initiatives were put in place aimed at providing affordable housing for all on one hand, and
encouraging home purchase and home ownership on the other. ‘‘Affordable housing’’ has since
become both the means and the end of today’s agenda of housing reform in China. Yet the success
of affordable housing hinges on many interrelated, complicated issues—such as heterogeneity:
differences and urban-rural disparities, social-economic differentials and housing preferences,
institutional transformation and marketization, and housing finance. It is these issues that this
collection of papers on Affordable Housing in China addresses. The following four papers shed
light on the recent development of affordable housing in the economy in transition.

Preview

The first paper by Zhou Yu examines the housing trends in China and its four autonomous
municipalities: Beijing, Shanghai, Tianjin and Chongqing, in the late 1990s. It provides a
comprehensive review of what has been happening on the Chinese Mainland in terms of housing
development and highlights the drastic changes in the housing sector. This paper also analyzes
regional differences and urban-rural disparities in housing quality and living arrangements. Zhou

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had examined the trends in homeownership and housing distributions over time and argues that
demographic and institutional factors, instead of economic factors, were influential in housing
distribution and for housing market formation.
The second paper by Donggen Wang and Si-ming Li studies the housing preferences of
Guangzhou people through choice experiments framed in experimental design methods. Joint
logit models are used to analyze both neighborhood and dwelling attributes against demographic
data, such as age, household income and education level, etc. Research findings indicate that
neighborhood and location-related attributes are more important in making home purchase
decisions than dwelling-related attributes. The authors also envisage that in future, the formation
of Chinese inner cities will be dominated by the aged and the urban poor while younger people, as
well as those better educated, will occupy the outskirts.
The third paper by Zhang Xing Quan looks into (i) the institutional transformation and
marketization, and (ii) the changing patterns of housing investment in China. Zhang’s paper
examines the changing roles of various stakeholders in the housing system, including the state,
work units and households. They have shaped the housing investment patterns. Zhang concludes
that due to economic pressures, housing reform measures and decision-making have been brought
closer to levels where economic activities are. In terms of housing investment, state influence has
been substantially reduced and replaced by non-state institutions such as households, developers,
cooperatives and financial institutions.
The fourth and last paper by Stanley Chi-Wai Yeung and Rodney Howes examines the
operation of the Housing Provident Fund (HPF) as a vehicle for home mortgage and housing
finance in Shanghai. The authors explain how the HPF has made an impact on housing supply
and demand. Both identify a number of obstacles for affordable housing provision in Shanghai.
Examples are the lack of a second-hand housing market, under-developed real estate and property
management professions, and unclear land and property legislation. They single out the
insufficient funding for housing development as the most critical obstacle in the city. They also
review the strengths and limitations of the HPF as a means of financing affordable housing
development in China. The authors conclude that the HPF has been successfully implemented in
Shanghai, resulting in increased housing production. On the other hand, the HPF has stimulated
housing demand by providing workers with housing loans. They further recommend the adoption
of an HPF as a housing finance model for consideration by other major cities in China.

Eddie C.M. Hui,

Francis K.W. Wong
Department of Building and Real Estate,
The Hong Kong Polytechnic University,
Hung Hom, Kowloon, Hong Kong, China
E-mail address: bscmhui@polyu.edu.hk