China is in the midst of an urban revolution, with hundreds of millions of migrants moving into cities every year. Since 2011, for the first time in history, more than half of China’s 1.3 billion citizens (690 million people) are living in cities. Another 300-400 million are expected to be added to China's cities in the next 15-20 years. New Premier Li Keqiang recently proposed accelerating urbanization in China, and said urbanization is a “huge engine” of China’s future economic growth.With its unprecedented speed and scale, Nobel laureate Joseph Stiglitz has called urbanization in China one of the two main forces (the other being technological development in the U.S.) shaping the world in the 21st century.
Yet, China’s urban dream may be derailed by the lack of affordable housing in cities for the massive influx of urban residents.
For almost five decades, Chinese cities were dominated by welfare-oriented public rental housing provided by either the government or public employers. Severe housing shortages, residential crowding, and poor housing conditions were common problems in cities. Over the last two decades, Chinese cities have experienced an unprecedented housing privatization, as the Chinese government has sold public rental housing at subsidized prices, encouraged developers to provide new private housing, and ended public housing provisions.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
With the influx of both domestic and international investment, there has been an unprecedented housing boom in Chinese cities. In the decade leading up to 2010, according to the Economist Intelligence Unit, China constructed roughly twice the total number of houses currently in the UK, or about the same amount of houses in Japan.
These new houses were also much larger and of a higher quality than the ones they replaced; residential floor space per capita in cities increased from 43 in 1980 to 340 square foot in 2010, although this is still much smaller than in the United States (700 square foot per person). 75% of households in cities/towns(85% of all households nationwide) were homeowners in 2010, compared to 20% in the 1980s. This rate of homeownership is higher than in many developed countries.
Meanwhile, housing prices have skyrocketed in cities, with the national average housing price increasing by 250% in the decade between 2000 and 2010. The housing price-income ratio classifies much of China as“severely unaffordable” in terms of housing. In big cities like Beijing and Shanghai, a modest apartment can cost multiple millions of yuan to purchase, and thousands of yuan to rent, making housing affordability the top concern of most low- and middle- income households.
As a result, millions of migrants have been completely left out of the “Chinese dream,” with few owning homes in cities and most living in extremely crowded, poor quality dwellings. Migrants are generally more vulnerable in the housing market due to their lower incomes and the discriminatory Household Registration System, or hukou system (often called an internal passport system), under which migrants are not considered “legal” residents in cities despite living and working in there over the long-term. Without local urban hukou, migrants are not entitled to welfare benefits such as subsidized housing. Even in Shenzhen, the city of migrants, local hukou is required to access low-income housing. In others cities like Beijing, several years of local hukou is required before applying for low-income housing.