Urban Housing in China Notes

China Urbanization

  • Two Types:
    • Land-focused: Local governments expropriate and lease land for urbanization projects.
    • Labor-focused: Rural to urban migration, the hukou system, and socio-economic inequality.
  • Two Tracks:
    • Formal: State-led spatial expansion via land capitalization.
    • Informal: Villagers building housing for migrant workers on remaining collective land.

Land Regime in China

  • Rural land: Collectively owned by villages.
  • Urban land: State-owned, managed by municipal governments.
  • Rural land converted to urban land through state expropriation.
  • Villagers compensated for expropriated land.

Urban Villages (Chengzhongcun)

  • Informal, low-income housing estates on former farmers' fields.
  • Offer affordable housing and services to migrant workers.
  • Large migrant populations reside in urban villages in cities like Shenzhen, Guangzhou and Beijing.
  • Driven by rapid city expansion and dual land/housing market.

Labor for Urbanization: Rural Migrants

  • Rapid urbanization relies on cheap labor from rural migrants.
  • Migrants often lack urban hukou and basic welfare (housing, education, healthcare).
  • Urban villages provide housing inclusion for those without urban hukou.

Hukou System

  • Household registration system that divides the population.
    • Favored sector: Urban residents with full citizenship rights.
    • Marginal sector: Rural migrants with fewer rights.
  • Without urban hukou, limited access to social welfare, education, and housing benefits.

Problems and Challenges in Urban Villages

  • Ambiguous legal rights and lack of regulation contribute to informal land/housing market.
  • Poor sanitation, fire risk, limited infrastructure.
  • Property-led redevelopment can displace migrants without affordable housing alternatives.

Danwei - Work Unit

  • Social and spatial organization in Chinese cities (1950s-1970s).
  • Provided employment and welfare benefits (housing, schooling, healthcare).
  • Large urban compounds with block-house layouts.

Danwei System

  • Industrial development prioritized.
  • Work units responsible for housing provision.
  • Allocation based on administrative position.
  • Problems: lack of investment, shortage, unequal distribution, low quality housing.

Housing Reform

  • Two tracks: privatization of public housing and development of a private housing sector.
  • Motivation: reduce burden on municipal budgets.
  • Private housing ownership supported from 1984.
  • Experiments with selling commodity housing and offering local urban registration.

Housing Market

  • Privatizing the housing system and creating a housing market.
  • Purchase previous public rented housing with subsidies.
  • Housing Provident Fund (HPF): mandatory contribution system for housing purchase.

Gated Communities

  • Private neighborhoods with gates and walls providing exclusive services to residents.
  • Widespread in commodity housing.

Housing as Investment

  • Property is an attractive investment due to restricted alternatives and low deposit rates.
  • High proportion of household assets in real estate.

Housing and GDP

  • Residential housing construction is a main pillar of economic growth.
  • China is the world’s biggest housing market.

Affordability

  • Homes are increasingly unaffordable.
  • Potential vulnerability: over-borrowing by homebuyers.

Housing Bubble

  • Property is the biggest risk in China.
  • The property sector accounts for a quarter of the demand.
  • Three red lines to manage developer liabilities.

Chinese-style Home Ownership

  • Government retains land ownership in perpetuity.
  • Homebuyers get a lease (right to use land) for 20-70 years.