Economy

Provincial governments held accountable for cheap housing

By Jin Zhu (China Daily)
Updated: 2011-02-22 15:08

BEIJING - The central government has signed strict agreements with provincial governments to guarantee that they will meet a target calling for the construction of 10 million government-subsidized apartments this year.

The Ministry of Housing and Urban-Rural Development began to sign documents on Monday with 31 provincial, municipal and autonomous region governments, as well as the Xinjiang Production and Construction Corps, urging them to maintain a steady supply of subsidized housing this year, the Beijing-based China Business Journal reported on Monday.

The local governments must sign the agreements by Friday, the report said.

China plans to have 10 million government-subsidized apartments built this year, which is 72.4 percent more than were put up in 2010, official figures show.

The projects will begin before the end of October. Local leaders who fail to fulfill their tasks will face administrative punishments including demotion or dismissal, the report said.

Many local governments now obtain a large amount of their revenues from the construction of commercial apartments, because they charge a fee for the release of land to developers. Subsidized housing in contrast, is sometimes ignored, because governments often have to provide the land for less money to attract the interest of developers.

This is the second time that the central government has tried to hold provincial leaders accountable for ensuring a supply of government-subsidized housing.

Similar agreements were signed between the central government and its local branches last May.

The ministry has not confirmed that the contracts have been signed, but details on the construction targets set for some provinces have been released on its official website.

For instance, 420,900 government-subsidized apartments will be built in Henan province, 400,000 in Yunnan and 158,700 in Gansu.

Related readings:  Jan property prices rise in most cities  Ministry to make local govt pledge subsidized housing supply  Beijing's first public rent apartment building roofed

The policy comes after the State Council, or China's Cabinet, introduced eight measures on Jan 26 to curb rising housing prices, calling for an increase in the supply of apartments that poor residents can afford, the introduction of rules preventing residents from buying more than a certain number of properties and the adoption of higher transaction taxes.

Li Chang'an, a public policy professor at the Beijing-based University of International Business and Economics, told China Daily on Monday that it's obvious the central government is working hard to build housing for low-income earners.

"Of course, signing agreements is an effective and powerful way to urge local governments to supply affordable apartments," he said, noting that the country last year began construction on 5.9 million government-subsidized apartments, exceeding its original target by 100,000.

"If 10 million subsidized apartments, which is almost as many new commercial housing projects as appear in the country in a year, can be constructed this year, the rise in property prices will be slowed down greatly," Li said.

Sixty-eight out of 70 cities reported that the prices of local homes had risen from what they were a year earlier, the National Bureau of Statistics reported on Feb 18. Ten out of the 70 cities surveyed saw prices rise by more than 10 percent, according to the bureau.