Effects of housing policies on intra-urban inequality in transitioning China

Abstract

In the People's Republic of China, housing reform was launched in the 1980s as a component of the overall economic reform. In the 1990s, housing policies, privatization and subsidies combined, were found to contribute to over one-third of the overall inequality in urban income distribution in China. My hypothesis is that housing inequalities are reinforced in the reform years. In the first half, I discuss three types of general mechanisms: the income-regressive nature of the Housing Provident Fund, the exclusion of rural migrants from urban housing welfare, and the strengthened work-unit-based inequality in reform years. In the second half, to offer some empirical support, I conduct a case study of housing relocation in a large-scale urban redevelopment project-the Xintiandi redevelopment project in Shanghai. My main findings are that the government formed a pro-growth coalition with the private business, and middle-to-low income residents were excluded from the negotiation process. Families in difficulties and families with strong negotiation power received preferential treatment to facilitate the relocation process. In summary, market reform has preserved some features of socialism, particularly the advantages of certain urban population groups with political implications.

(cont.) At the same time, the market forces are adding new forms of inequalities, which results in an increasing overall inequality level in urban housing.