Urban Housing Reform in China: An Economic Analysis

摘要

As part of the broad economic reforms implemented during the 1980's in China, an important program of urban housing reforms was announced in February 1988. Its aim was to introduce market mechanisms in what has so far been an administratively managed urban housing system. The purpose of the paper is to analyze some major elements of a market-oriented reform drawing on the experiments carried out in selected cities prior to the 1988 Reform Plan. Because the housing problems faced by China share many systemic features with those of socialist countries of Eastern Europe and the USSR, the analysis is relevant beyond the Chinese case. The paper selects some critical issues for the introduction of market mechanisms in urban housing. First, the paper analyzes pricing and allocation reforms in the existing stock. The next section provides an analysis of the tenure choice based on the user-cost of capital concept to show the functional relationship between rent reforms and the potential development of home ownership in Chinese cities. It then evaluates the significant efficiency benefits that can be derived from allowing the free exchange and allocation of existing housing units.