March 10,2011

China's Social Housing: 10mn Units to Cost RMB1.3-1.4tn in 2010

By CSC staff,Shanghai

According to the Ministry of Housing and Urban and Rural Development, the 10mn units of social housing include 2mn homes for sale, 4mn for rental and 4mn for rebuilding of shanty towns. Funding is from various sources: RMB500bn from govts (RMB129bn from the central) and RMB840 from non-public investment (including RMB100bn from CDB, the largest policy bank), bank loans to LGFVs, proceeds of housing provident fund and private sector investment.

China's program of constructing 36mn units of social housing in 2011-15 is the largest govt-led home building program in world history. By doing so, China can at least can avoid slums, redistribute national wealth, provide freedom to move, stimulate demand when national savings is in massive surplus and bring about social stability. To be sure, nothing is free (other than construction costs), as govt-led programs usually are linked to inefficiency in resource allocation and corruption, but a private property market may have its own problems. Social housing is a big theme in a big time, so you need a big top-down picture on this issue. A major contrarian call related to this issue: FAI can even better rebalance the Chinese economy than consumption if China makes the right FAI.

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