Arduous task

In China where the per capita gross domestic product is only $6,000, 84th in the world, relocating so many residents is not easy. High costs, financing and compensation issues are among the most problematic.

Zaozhuang city has 175 rebuilding projects either completed or underway, with 104,000 households moving. The total cost, including government spending, bank loans, commercial investment from real estate companies and payments from individuals, had reached 50 billion yuan by June, roughly 80,000 US dollars per household; a heavy burden for both government and construction companies.

Some residents have even refused to be relocated, demanding unreasonable compensation, which has seriously affected demolition and rebuilding progress.

Ning Fangwei, deputy general manager of a real estate company in Zaozhuang, said that over the past years, national controls over housing prices had restricted bank loans to real estate companies, making it hard for their company to stay afloat.

To help solve these difficulties, on June 26 the State Council decided to offer financial support, as well as preferential tax and land policies, for the rebuilding. It also decided to improve compensation.

Li Tiegang, deputy chief of the school of economics of Shandong University, said the rebuilding is an important part of current "urbanization with Chinese characteristics", which turns wishes of individuals into a national goal.

Li believes the project not only helps low-paid residents improve their housing quality, but also stimulates the local economy.

Urban renewal over the next five years will boost 40 sectors of industry with a total spending over 2.5 trillion yuan, securing 2 million jobs every year, according to the Ministry of Housing and Urban-Rural Development.

It also will help stabilize house prices, and ease the real estate market, he said.