Chapter 2: The New Paradigm

- A Concise Review of Urban Housing System in China

Housing Regeneration is a part of the current housing development in China. Understanding the gen eral context of urban housing development in socialist China, both the past and present, would give us a clear perspective towards the issues we are dealing with. This chapter is a brief analytical review on urban housing development of the PRC. The four decades of housing development will be divided into two phases, 1949-1978 and 1979-present, characterized by two different political vision towards urban housing production (Lin, 1992). It could also be seen that the first phase was a trial on revolutionizing urban housing which failed and the second phase was marked by efforts to implement corrective mea sures. However, the foundation of the old system is difficult to reshape. Emphasis will be on the present phase, because with the overall reform and open door policy, introduced since 1978, urban housing system, like all the other aspects of the society, has been undergoing major changes. Housing regeneration in Beijing is a part of the spectrum.

2.1 The First Phase, 1949-1978

After 1949's establishment of the PRC, the new government needed to tackle a lot of issues it never confronted, industry and economy were new subjects to the peasant generals who coming from the countryside. City, to a great extent, was also a new environment.

In the vision of the new state, the country was collectively owned, and every citizen had equal rights. The collective interest was more important than that of each individual. The national priority was to build up the new state, and only then the living conditions of its people could be improved. There came the notion that 'production had to come before living well'. Defense consideration also boosted this notion. Developing the national industry in this pre-industrialized society, especially the heavy indus try, thus improving the defense ability, was the new government's leading concern.

Even before they entered the cities, the new leadership had already planned to transform the Chinese cities from 'consumer city' to 'productive city'. After a short 'adaptation period' (Kwok, 1981, p.148), the Chinese government started to push its industrialization process. The essential disposition of eco nomic strategy during the first phase can be sumed up as follows: "a high accumulation rate, a powerful emphasis on heavy industry (especially the iron and steel sector), neglect of agriculture in general but an obses sive concern with grain output, and a deep antipathy towards non-productive capital expenditures associated with the urban sector" (Kirkby, 1985, p.169). Urban housing, deemed as a "consumption good", was not an active component of the social economy. The annual investment on housing was very low, only 0.37 per cent of GNP was allocated on housing construction during the first phase (Zhu, 1986).

Besides the neglect of housing production, another basic policy for the urban housing system during the first phase was the notion that urban housing was a welfare enterprise undertaken exclusively by the state. This ideological and political base had governed the housing production, distribution and management system for the following three decades and deeply affected the social equity.

In socialist economy, the land was owned by the state in urban area, the number of houses and places where these houses were to be built were decided according to government's plan, building materials were allocated by the government, construction in cities was monopolized by a few state-owned con struction companies. Housing distribution was also managed by state-owned work units or local hous ing administration bureaus, even the post-occupation maintenance was taken care by those work-units or housing bureaus. On the whole, the housing production process was controlled by the central gov ernment.

Under the notion of " Production first and Living well later" and in the name of equality, the specific needs of each family were deliberately ignored. Thumbnail('lian-fig21-sm.jpg','lian-fig21.jpg'); ?> The size, quality and other specifics of public housing were standardized by the state government. Monotonous housing typology was built across the coun try, with only minor notifications to accommodate climatic differences (fig. 2.1). This was quite simi lar to the then USSR practice, where every five years, a single residential design was built throughout the country (Coleman, 1985, p.19). Under this centralized housing production system, mass housing was the only choice.

During the first phase, under the welfare policy, only the government was responsible for building and distributing housing to individuals. Private home ownership was greatly discouraged and consequently diminished. Housing market was virtually eliminated. Hence, the only possible urban housing delivery system was along the administrative loop.

There were two types of institutions responsible for housing distribution 1. One was the large state owned work-units, which had the means for housing their employees; the other was the local housing management offices, which were in charge of housing the people working in collectively owned or small state owned work-units within their jurisdiction. At that time, when one was employed, one was entitled to welfare housing. Within this system, almost every urban family could get housing from some appropriate institutions.

The state monopoly on housing production and distribution was aimed to produce urban housing efficiently and maintain equality in society. What was the reality brought by all these good intentions and idealized system?

By the end of the Cultural Revolution, the extreme shortage of residential accommodation in cities had reached a very serious state. According to a 1978 year end survey of 192 large and medium-sized cities, the average per capita living floor space (excluding kitchens, lavatories and corridors) was only 3.6 m2 - this was even 0.9 m2 lower than the figure of 4.5 m2 in 1952 (Kirkby, 1985, p166). It was estimated that nationwide, there were about 35.79% of all urban families lacking adequate accommo dation at that time. Some of these families lived in warehouses, corridors, workshops, classrooms, offices and cellars. Families where three generations shared the same room were very common. In addition, a lot of newly wed couples could not get accommodation (Lalkaka, 1984).

The extreme shortage and overcrowding was just one side of the urban housing problem. On the other side, the existing housing stock had dilapidated to very bad conditions. In the years 1979-1980, more than half of all urban residences were in urgent need of repair, and "building accounting for more than 30 million m2 of floor space were in danger of collapsing at any moment" (Lalkaka, 1984).

Given such over-crowding and poor living conditions, it should not be surprising that conflicts over housing were frequent. The extremely tight living space directly affects the people's daily life. Lack of privacy caused tensions between family members. Conflicts between neighbors over the use of shared space such as courtyards and corridors, were more common. The over-crowded living condition dras tically affected family lives. Some people chose to work at night in order to allow the other family members enough space to sleep. A more common phenomenon was that parents sacrificed their marital life to live separately in shared dormitories so that their children could have a room to get married. This over-crowded living conditions also had negative effects on development of children.

It was clear that the urban housing scarcity in China had become one of the most explosive social issues. The causes of this crisis lay on both sides of housing demand and housing supply.

One reason for China's urban housing scarcity was very simply that population had grown faster than residential floor space. According to the 1982 census, the total population increased from 1949's 541.67 million to 1982's 1015.41, a 87.46% increase (Kirkby, 1985, pp.113-129). In 1949, only 10.6% of total population lived in urban area, and in 1960, after only a decade, urban population dramatically in creased to 19.7%. On the following years till 1976, under the government "anti-urban" measures, with forced migration to the countryside, population decreased to 12% in 1976. And in the post-Mao's era, this figure rose again, reaching 15.06% in 1982 (Kirkby, 1985, p.121).

Although great emphasis had been placed on controlling the growth of urbanization, Given the sheer size of China's total population (the direct result of the 1950s baby boom), even a relatively low rate of urbanization implied a huge absolute urban population size and a substantial absolute increment since 1949. According to Kirkby (1985, pp.113-129), the urban population in 1949 was only 57.65 million, which increased to 152.91 million in 1982, a 265% increase.

From the supply side, the most direct factor should be attributed to the governments policy. There were mainly three categories2 of housing ownership in urban China: Work-unit owned; municipal housing bureau owned; and privately owned. In 1982, for the municipalities as a whole, 53.6% of all housing floor space was operated by the enterprises or institutions, 28.7% was managed by the municipal housing bureau, and 17.7% remained in private hands - mostly owner occupied 3. These figures showed housing was supplied largely by state owned work-units and municipal agencies, which, under the planned economy, were all controlled by the central government.

As noted above, the policy on urban housing was marked by two themes, one was the low priority of housing construction in state economic structure, the other was its welfare nature. These two notions were self-conflicting. The state insisted on bearing the exclusive responsibility, yet refused to commit adequate financial support to fulfill this task.

In 1950's, since the government requisited the 'spare dwellings' from the landlords and tenants of the previous regime and redistributed to the relatively poor sectors, rent had been a politically charged issue. Under the assumption that housing was a welfare consumption good, state's subsidy on housing was taken for granted, and rent remained extremely low. Till the early 1980s, average monthly rent for public housing in urban areas was as low as 0.13 Yuan per m2 (Zhu, 1986). Rent might vary from city to city, but in general, rent was about 2-3% of a family's monthly income, it was very low compared to other developing country's figure of around 10%.

Ideally, rent should cover depreciation, maintenance, interests, land value, and giving a reasonable return on the initial investment. At least, rent should cover depreciation and maintenance (called real cost in China), in order to maintain the existing housing stock. However, this was not the case in China. According to Lalkaka, in the early 1980s, rent was only about a quarter of the real cost. The difference was made up by subsidies from various sources (Lalkaka, 1984).

The excessively low rent did not bring any return to the investment. On the state level, the low rent blocked the expansion of new housing construction. Given the national economic development objec tives of a developing country, the limited revenue was always needed in other priorities. The exces sively low rents meant that the more housing built, the heavier the burden incurred (Lalkaka, 1984). Expanding the new housing construction would be at the cost of other pressing items on the state budget. The local authorities and work-units also lacked the economic motive to invest in residential housing. Investment in productive construction brought them a rate of return, whereas investment in heavily subsidized residential housing was basically money "thrown into a black hole".

The irrational rent structure also impaired the repair and maintenance of the existing housing stock. The lack of proper maintenance had led to much of the residential housing being abandoned far earlier before their full life expectancy. The loss of existing housing stock negated the gains made from new housing construction. In the absence of improved upkeep of existing dwellings, new construction alone could hardly raise the average condition of housing.

Another ill effect of the low rent practice was that it defied the rational allocation of housing. Those people with power or having 'connections' with power were inclined to occupy ever more housing space. New housing construction thus often failed to benefit those in dire need. Rent loss its function as a mediator of demand and supply, instead, it led to a new social inequity. Since the more space one occupied meant the greater the subsidy that one received, those living in over-crowded housing lose twice, worse living conditions and little or no subsidy received.

The state monopoly on urban housing production processes, also impaired urban housing develop ment. Because the state bore the exclusive responsibility, the grass-roots' initiation was left out from the housing production process. The state monopoly on housing construction and building materials, literally eliminated private access to building materials. At the same time, the standardized mass housing typology required relatively high quality materials and advanced technique, which excluded possible local efforts. This brought on the contradiction that as the state pursued efficiency in monopolizing the housing production industry, housing construction was inefficient in that vast amount of local labor force and traditional materials were disregarded at large.

For many years, housing was a welfare undertaking, which every citizen was entitled to, but did not have the ownership. Housing was rented, maintenance was of course the matter of the state - the landlord. Residents were reluctant to contribute any effort in the upkeep of their housing, because it was not theirs, and they expected to be allocated better ones, as were promised. Further, across the board, low wage meant they did not even have the means to contribute. As for the sectors of private ownership, housing conditions were in no better condition (Kirkby, 1985, p.168). The few remaining private housing were usually the poorer and smaller structure which the state did not wish to requisite in the 1950s. In the atmosphere that discouraged private ownership, there was no motivation to do any essential repairs and maintenance. The private home owners were also afraid that someday their houses might also be requisited. Although they owned their houses, the performance of the private sector on the upkeep of their housing was minimal, let alone involved in any new housing construction.

From the analysis above, the gigantic urban population and, the lack of resources and the welfare designation jointly contributed to the urban housing crisis. It was ironic that the welfare status of housing not only did not resolve the urban housing problem, on the very contrary, it inhibited possible growth of housing production. The excessively low rents hampered the development of urban housing construction, for it was not conducive to the expansion of new construction and the upkeep of existing housing stocks. Further, as a government allocated item, it invited abuse by the privileged instead of being fairly distributed to the needy. Since 1978, during the post-Mao era, efforts to deal with this crisis had brought in-depth reform to the urban housing system.

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2.2 The Second Phase: 1979 - present

After 1976, the last year of the Cultural Revolution, China began a new era. Economic goals were placed more in the foreground than at anytime since 1949. Thirty years after the revolution, China seemed to have passed the phase of dogmatic communism. China's technological backwardness and relative poverty were openly acknowledged for the first time and the national goal of Four Modernization was repeatedly proclaimed (Murphey, 1980, p.145). Ever since, improving the living standards of people became the foremost concern of the Chinese government.

For the urban population, items pertaining to living standards were many and varied - foodstuff, cloth ing, transport, electricity, heating, culture, recreation, health care, and, above all, housing. As described above, the extreme shortage of residential housing in cities had been widely acknowledged to be one of the most explosive social issues. The government leaders were aware that ignoring the demand for improvement could be at the cost of political stability. During the post-Mao period of 'economic read justment', introduced in late 1978 and extended into the early 1980s, the government adjusted its investment structure, "in terms of re-allocation of the state's resources, the urban housing sector has emerged as the single greatest beneficiary" (Kirkby, 1985, p.170). The drastic increase in the urban housing invest ment was apparent both in absolute value and in the percentage of housing investment in the basic capital construction funds (see Table 2.1). In 1979, for the first time, housing investment crossed the 10% mark to reach 14.8%, and it consecutively increased and reached to 25.4% in 1982 (Lin, 1992). According to Lin, the annual completed urban housing floor space also increased dramatically, 1979's doubled that of 1978's (74.8 million m2 to 37.5 million m2), and redoubled again in 1984 (147.2 million m2) (Lin, 1992).

Table 2.1 Proportion of all State Basic Capital Construction Investment in the Non-productive Sector and State Housing. (Source: Kirkby, 1985).

period Non-productive Investment Housing Investment m.Yuan % m.Yuan % Restoration 1950-52 887 34.0 227 10.6 1st FYP 1953-57 3,879 33.0 1,076 9.1 2nd FYP 1958-62 3,529 14.6 991 4.1 Readjustment 1963-65 2,895 20.6 970 6.9 3rd FYP 1966-70 3,160 16.2 786 4.0 4th FYP 1971-75 6,176 17.5 2,015 5.7 5th FYP 12,245 26.1 5,546 11.8 1976 7,063 18.8 2,284 6.1 1977 7,089 20.6 2,630 6.9 1978 10,475 20.9 3,921 7.8 Readjustment 1979 15,834 30.3 7,728 14.8 1980 19,961 35.7 11,166 20.0 6th FYP 1981 19,048 43.0 11,119 25.1 1982 25,263 45.5 14,105 25.4

Note: Non-productive investment is that part of the state's 'basic construction funds' devoted mainly to urban utilities, cultural, educational, and social service installations, urban utilities and housing, public buildings, commercial enter prises, and transport and communications construction.

Non-productive investment: column 1 - annual average amount in millions of Yuan during the respective planning period, prices adjusted; column 2 - average percentage of all basic capital construction investment devoted to non-produc tive projects during the respective planning period.

Housing investment: column 1 - annual average amount in millions of Yuan given over to public housing invest ments by all urban agencies involved (both housing bureaus and enterprises) during each period, prices adjusted; column 2 - average percentage of all basic capital construction investment taken by housing during the respective planning period; note that the unit cost of housing floorspace construction has more than doubled during the period (e.g., 1957: 47 Yuan per m2; 1980: 113 Yuan per m2).

Although resources allocated to urban housing construction were on an unprecedented scale since 1979, the newly constructed housing barely met the huge demand accumulated over the years 4, and the great bulk of the construction effort was absorbed by the steep increase of the urban population during the late 1970s and early 1980s. The vast housing constructions had barely enabled the cities and towns to keep pace with the ever-growing urban population. Table 2.2 shows this situation. The improvement on living conditions was marginal, not enough to effect in political significance.

Table 2.2 Urban Population and Available Floorspace. (source: Kirkby, 1985).

Total urban Total housing Per. Capita population floorspace availability (millions) (millions m2) (m2) 1977 116.17 607.6 5.2 1978 122.78 651.2 5.3 1979 133.55 720.4 5.4 1980 140.28 810.0 5.8 1981 146.55 880.1 6.0 1982 152.91 960.6 6.3

Note: Total urban population - all urban places; total urban housing floorspace - living space only, the figures adjusted for depreciation at a nominal 1 per cent annually, and extrapolated from the 1980 year-end figure of 810 million m 2.

In terms of policy, the practice of the late 1970s and early 1980s, thoroughly reversed the former ideological neglect, and urban housing was the top priority on the government's agenda during that period. Nevertheless, urban housing was still a welfare undertaking of the state. The inherent problems of excessively low rents and state monopoly over housing production process persisted. The huge amount of funds on non-productive sector was at the expense of the investment in industry. For a developing country like China, rapid development of its national economy on a strong and modern industrial footing was always a priority concern. As discussed before, under the welfare practice, the more housing built, the larger the subsidy. How could the government fulfill this ever-increasing 'black -hole' of housing demand. It was obvious that besides increased input of resources, a fundamental reform on urban housing system was also necessary.

As early as in April 1980, Chinese Communist Party leader Deng Xiaoping suggested that the housing sector should be paid more attention and urban households be allowed to build or buy their own homes; selling either existing or new housing stocks, to occupying tenants and prospective buyers should be considered. Rent should be increased in order to induce urban dwellers to purchase a home of their own. He also suggested that differential rents should be introduced according to location of housing units. To compensate for the low wage reality, rental charge should be readjusted in conjunction with the introduction of rental supplement (Lau, 1993). Deng's suggestion paved the way for a gradual change in the urban housing from a social welfare undertaking toward an individual family's venture. The government was trying to disengage itself from the unbearable burden of housing its citizens. It wanted to share this responsibility with, and eventually transferred totally to the shoulders of each individual household. Deng's words also showed that rent could be the center of the housing reform. In addition, he pointed out the far-reaching scope of urban housing reform, the low wage policy, the price system, and even the potential land value. If put simply, although housing reform was a multi-facet enterprise, the key was to reestablish urban housing as a consumer product as opposed to a welfare undertaking.

Although not a concrete implementation proposal, Deng's suggestion seemed to be the crucial guide line for the urban housing reform in the following years. The State Council announced in June 1980 that urban housing should be commercialized gradually. Even prior to this, housing units had been offered to potential home buyers at construction cost since 1979. But the result was very insignificant owing to the lack of purchasing power of the average urban household, and the very low rental charge of public housing. The suspicion that private housing might be requisited by the state at some future date was also a factor. The fear of policy shifting, lasted until the late 1980s, was an important factor that discouraged private home buyers.

Between 1982 and 1985, a pilot marketing program was carried out in four medium-sized cities where individual purchaser, the purchaser's work-unit and the local government each paid one-third of the total construction cost (replacement cost) of a residential unit. Property right was to be shared between the purchaser and the work-unit (Lau, 1993). This 'preferential' scheme, aimed to ease the financial burden for the individual, was welcomed by urban residents and some small and medium-sized work -units which did not have sufficient resources to build housing for their employees. However, the per centage of new residential units sold was still small, the majority were retained for distribution through the usual bureaucratic channels. As long as public housing was available, individuals had little incen tive to buy their own homes. It seemed that if there was no major adjustment on the overall rent -subsidy structure, the promotion for home ownership would not receive much enthusiasm.

Rent was the key to the urban housing reform, and it was a complex issue. A rent increase or a restruc turing of the rent subsidies would have to involve a total restructuring of the economic system. In addition, as mentioned before, in China, rent was a politically charged subject. " Stable rents, like stable food and commodity prices, were considered a significant element in preserving the overall economic well -being of China's urban population" (Lau, 1993).

Since mid-1987, urban housing reform in a number of cities focused on rent adjustment. Based on the experiences among various cities, the State Council issued its Plan for Housing Reforms in Urban Areas in February 1988. The reform plan called for a complete change in the financial structure, man agement and performance of the urban housing sector (World Bank, 1992, p.27). There were four main components in the reform: First, the central government stopped allocating resources to housing con struction. The responsibility mainly shifted to work-units and local government. Rents could be ad justed upward to reflect the real costs of urban housing. Secondly, the reform aimed to establish a self -sustained housing finance system through the mobilization of household savings. Thirdly, to develop an independent, consumer-oriented housing industry. This implied transforming the state controlled housing production system to profit-oriented real estate development. Fourth, home ownership was encouraged, but heavily subsidized sales would be banned (Lau, 1993).

Now that the central government no longer assumed the sole responsibility for housing its citizens, it encouraged local governments, enterprises and individuals to take part in housing production. So far, housing investments come from four main sources: central government, local governments, work -units, and individuals (Lin, 1992). Among them, work-units (enterprises and institutions) bore the main burden. In 1982 work-units had increased their share of housing supply up to 71% (MaQuillan, 1985). However, not all the directives were followed in practice. Up till the early 1990s, rent increases had been modest in most cases. The modest increase was insufficient to motivate tenants to purchase their own units. Moreover, it was not uncommon to find work-units lowering the sales price to encour age individual purchase. For example in Guangzhou, the preferential sale price was less than one-third that of the cost (Lau, 1993). The revenues generated from the sales were by-far insufficient to construct a replacement unit. But why did heavily subsidized sales continue?

The fundamental reason underlying this phenomenon was that housing was produced and financed by a supply-driven system that generated unaffordable solutions. The mismatch of supply and affordability was demonstrated by the ratio of average unit prices to average annual urban household cash income. In most market economies, this ratio varied between 2:1 and 6:1, in China, the ratio might exceed 20:1, depending on the city and location. The rents required to cover fully the costs of investment in new units could surpass 70% of average household monthly income (World Bank, 1992, p.xii). Given the under-developed situation of housing financing system in China, such a high housing price was far beyond the average individual family's financial capability.

In addition, the incongruency between real costs of urban housing and its rental charge led to this practice. The selling price was reduced to correlate with the rental charge, so that the individuals were motivated to buy their home. The dilemma confronted by the local housing reform policy makers was obvious: either selling public housing cheaply but recovering some cash to finance new construction or carrying on subsidizing tenants because adjusted rent was still far below to recover costs. As the budget allocation to urban housing became tighter and the demand was still great, people in authority were induced to choose the former option as it was a secured source of finance.

Moreover, many work-units took selling housing at 'preferential' price as benefit to their employees. Overall reform left more discretion to each work-unit, and some with more resources decided to help their employees owning their homes.

From these considerations, though the central government tried to eliminate 'preferential' selling, the heavily subsidized sales continued to be the norm in many cities. In the early 1990s, apart from rent increase and housing privatization, some new measures were introduced. For example, Shanghai first introduced a provident fund, Beijing and some other cities began to require substantial rental deposits for newly occupied dwellings to cover all routine maintenance expenditures. All these practices aimed at raising additional funds to finance the construction of new housing. It seemed that inadequate atten tion was paid to the more basic issues such as raising rent to at least cover maintenance and manage ment expenditures. But, as a study of the World Bank pointed out that the maximum permissible rent adjustment was constrained by the wage reform (World Bank, 1992, p.xviii). Rent reform must corre late to the overall reform on wage, retail prices and subsidy system, which was beyond the control of housing reform policy makers. Other critics further argued that the present approaches were basically continuation of conventional centrally-planned economy, first setting a target of housing production which related to estimated demand, then measuring the amount of available resources to find out the amount required for financing of the targeted housing construction program (Guan, Hong and Zhang, 1992). This was very true because even the national objective for the year 2,000 had already been calculated5, and hierarchically every municipal and local government had their own targets.

If the introduction of provident fund was insufficient for erecting a self-sustained housing finance system, in the other direction of housing system reform, the rapid expansion of real estate market in 1992 and 1993 had some critics argued that the real estate property market was over heated.

Public ownership of land had not been legitimated until 1982's revision of the Constitution, which enacted all land in rural areas to be collectively owned and all land in urban areas to be state owned. Transaction of land either in ownership or use right was forbidden. However, as a result of the open -door policy, transaction of the developed land became necessary and reasonable. A further revision of a clause in the Constitution in April 1988 legalized the transaction of use right of land in accordance with relevant laws and regulations (Lin, 1992). This provided the legal base for the real estate develop ment in China.

Deng's famous pro-reform address after a trip to the south coastal cities in early 1992 spurred a new round of rapid growth in national economy. Real estate development had the fastest growth among others during the following few years. The development of the real estate sector, on the one hand, brought considerable financial income to the state 6 and, on the other, promoted the growth of many other related businesses. These clearly showed that real estate activities could be an active driving force to national economic development, urban housing could actually be a 'production good', not only a 'consumption good'.

Nevertheless, the growth in residential property market did not seem to benefit much the ordinary urban dwellers. Since profit was the prime concern of either domestic or foreign developers, most of housing projects were oriented toward the high-priced, high-profit market of overseas buyers and local high-income group. In fact, people with housing difficulties were not only unlikely to benefit from the property boom, they became the victims. The building boom helped fixed-asset investment jump 32.5% in 1992 compared to 1991. This caused a shortage of raw materials and services and rise in prices, which undermined the construction of ordinary urban housing, as well as raised the fear for another high inflation. The more direct ill-effect was inflated housing price. It was noted that in Beijing, the price of commodified residential housing for local residents doubled in 1992, reaching as high as 3,000 Yuan per m2 (Lau, 1993). The reasons for the rapid price increase in domestic sales not only came from the rise of construction costs, more importantly, it resulted from the exorbitant profit margins sought by developers.

Table 2.3 Housing Floor Area Completed in China Cities. (source: Lau, 1993).

Year Area completed Target(million m2) 1983-1988 140-150 1989 and 1990 100-106 1991 120 1992 130 1991-1995 150-160 1996-2000 160-180

How to carry forward the urban housing reform was an enormous task for the Chinese government in time of property boom. The sharp contrast between vacant luxurious apartments targeted at overseas buyers and the congested living quarters of ordinary people amplified the distorted real estate develop ment. In order to navigate the building boom toward fulfilling the huge demand for affordable home of average family, local government had re-devised their policy towards property development. In some cities, preferential treatment had been granted to developers for housing construction targeted at do mestic market.

Summing up, there was no easy solution to the deep-rooted urban housing woes in China. All inter -related factors: the low wage, nominal rent, employment-tied allocation system and limited provision of housing financing facilities, magnified the complexity of housing reform. Any drastic measure would bring serious side effects. A cautious and steady step by step course along the housing reform path must be taken to maintain social stability.

With a clearer scenario of urban housing system and the changing paradigms of housing reforms in mind, now it was time to review and analyze the main topic of this thesis: The Old and Dilapidated Housing Renewal Program in Beijing. The program was initiated in 1988 and had been fully imple mented by the early 1990s, a period saw fervent process of trial and error in housing reform. Although the author's focus was not on the housing reform strategies in this program, the approaches adopted were unavoidably reflect the changing paradigm.

1 There were two types of work-units during that time in China. One was state owned, the other was collectively owned, the private enterprises were mostly transferred to one of the above catalogue. Only after 1978, private sector again became a substantial constitute of the social economy. Generally the state owned work-units were larger in scale or more comprehensive in scope, such as large factories, government institutions, universities etc. The collectively owned work-units were smaller business enterprises such as bicycle repair shops and small restaurants. State owned work-units were under the administration of municipal government or state department, while the collectively owned work units were managed by the local district government.

2 Ma argued that there was the fourth ownership in China, landlord-owned housing, which was rented out as a major source of income (see Ma, 1981, pp. 228-229). This type of ownership was very minuscule before, but with the privatization of urban housing, it could account for a larger share in the coming years.

3 This figure was for 200 municipalities but it was probably in fact for all the then existing cities (Kirkby, 1985, p.166).

4 The reasons are as described above, for the period between 1958 and 1976, urban housing received insufficient funds to keep pace with rising populations and the deterioration of the existing housing stocks.

5 By the year2,000, per capita living area for urban population is targeted at 8.0 m 2. (which is equivalent to 12.0 m2 usable area per person). To meet this target, annual production should reach 180 million m 2 per annum in the Ninth Five-year Plan period (1996 -2000).There is also a plan to assist over-crowded households. It is planned that by 1995 families with per capita living area below 4 m 2 will have been given relief housing and by the year 2,000 no families should have below 6 m 2 per person (Lau, 1993).

6 In 1991, China's incomes from the land use tax, the house property tax and the tax paid by real estate development enterprises hit RMB 10 billion, accounting for 2.3% of the country 's financial income that year (Lau, 1993).

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