Oct 15th 2011 | BEIJING | from the print edition
IF THERE is one thing that annoys the man on the Beijing omnibus, it is the cost of housing in China’s cities. By unofficial estimates, the average price of a flat in the capital has risen between five and ten-fold in the past decade. So Li Keqiang, who is likely to become China’s next prime minister, is trying to show his mettle by sorting out the problem. Under his direction, local governments have embarked on a campaign to build unprecedented quantities of social housing for the urban poor. Officials have been claiming a spectacular success, but persuading citizens to share their joy is proving another matter.
Pressure from Mr Li looks, on the surface, to be paying off. Official statistics suggest that in recent weeks, local governments (not normally known for their enthusiasm for spending money on the poor) have been racing to meet their quotas for the year. On October 10th the central government declared that a target of starting work on 10m social-housing units this year was 98% complete. In September alone, work began on 1.2m units—more than twice the number of private homes America began building last year.
The central government is not just trying to woo the poor. It also sees the project as a way of pepping up the economy at a time of global gloom. This year’s target represents a 70% increase in the construction of social housing compared with 2010 (see chart). In March the government announced a goal of completing 36m units by 2015. If three people on average live in one flat, this would be the equivalent of building new housing for the combined populations of Britain and Poland.
Some state-controlled newspapers have, however, been airing scepticism. The surge in construction has been compared by a few commentators to Mao Zedong’s Great Leap Forward of the late 1950s, when local governments vied with one other in their increasingly implausible claims of soaring output. “This kind of farce is showing signs of making a comeback”, said a columnist inPanyu Daily, a newspaper in the southern province of Guangdong. In September alone, others noted, Guangdong’s reported fulfilment of its quota for the year increased from 66% (the country’s lowest rate) to 96%, thanks to work started on another 291,000 units. An article published by Sina.com, a news portal, said many analysts were wondering whether Guangdong had massaged its figures.
Next year’s target is for work to begin on another 10m units (roughly the number of commercial housing units sold nationwide last year). But Zheng Siqi of Beijing’s Tsinghua University worries whether the building boom is sustainable. The central government, she reckons, is only paying about 10-20% of the construction costs, which officials say will total around 1.3 trillion yuan ($204 billion) for 10m units. It needs to provide more, Ms Zheng says.
Last month the central government told local authorities that they would not be allowed to build new offices for themselves if they failed to meet their quotas. That might help: local governments are fond of erecting lavish headquarters. Political pressure on them is likely to mount while Mr Li, a deputy prime minister, prepares to take over from his boss, Wen Jiabao. But sustaining this pace for long will not be easy. Local governments are well versed in frustrating central directives.
Critics also point out that the social-housing programme will mostly benefit urban residents, whose household-registration certificates, or hukou, identify them as city residents. Migrants from the countryside usually find it difficult to get hold of such certificates, even if they have lived in a city for many years. Most local governments prefer not to hand them out, because to do so would commit them to providing the holder with the full range of welfare benefits.
The central government hopes the new housing will reduce public discontent over property prices, but even among urban hukou holders, many are cynical about the government’s efforts. Officials find it difficult to assess who is qualified for the housing, given that many households disguise their true incomes. Some of the better-quality housing ends up in the hands of people who are clearly not entitled to it. A visit to one social-housing complex in eastern Beijing, Zhuxin Homes, finds several luxury cars parked around its apartment blocks. An estate agent nearby offers one of its apartments for rent: a sign that the owners have more than one property and are illegally turning their social housing into a money-spinner.
Mr Li has stressed the importance of ensuring that social housing is distributed fairly and has called for supervision of the process “by the media and people”. But his own officials seem reluctant offer much convincing detail on local government compliance. As a report by Macquarie Capital Securities laments, “reliable facts are still hard to find”.
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