Presenting his annual report to China’s National People’s Congress on Saturday, Wen Jiabao pledged to “firmly curb the excessively rapid rise in housing prices”。 It was a promise the prime minister has been making for much of the past year.
Indeed, it was at last year’s meeting of the political elite that the furore over rising house prices burst into the open. More than half of the proposals submitted by delegates were related to the cost of buying an apartment.
Weeks earlier, the authorities had shut down a popular soap opera that explored the lives of urban “wage slaves” struggling to pay their mortgage. “It has become the biggest political issue in China,” says Hu Xingdou, an economics professor at the Beijing Institute of Technology.
The sharp rise in house prices in many cities has started to create a cleft within the urban middle class, between a large group of winners who got on the property ladder early and have ridden the rising market and a smaller group of mostly younger people, especially recent university graduates, who feel shut out.
House prices have also become a lightning rod for anxiety about widening inequality. A researcher at a state think-tank produced a revealing report last year, which claimed that “grey income” not declared to the taxman is as high as Rmb9,300bn （$1,420bn）， equivalent to 30 per cent of gross domestic product – much of which is funnelled into property speculation.
“Once government power is united with capital, the free competition of the market economy begins to be replaced by a monopoly of crony capitalism, leading to disparity in income and property distribution,” wrote Wang Xiaolu at the National Economic Research Institute.
As well as trying to reduce bank credit for housing, Beijing is relying on two policies to control prices. Local governments are being encouraged to build large volumes of public housing that can be rented to low-income families. And a property tax is being tentatively introduced in Shanghai and Chongqing for larger houses.
The holders of all that “grey income” hate the idea of a property tax, but the idea has long been considered crucial by reformers, because it could both reduce speculation in real estate and provide an income stream for local governments, which rely too much on land sales. However, according to Tao Ran at Renmin University, the tax is only one part of the solution.
It should be accompanied, he says, by land reform that allows farmers to sell their land directly to property developers. At the moment, only local governments can take over their land and they also decide the level of compensation.
“If farmers can sell their land directly, cutting out the heavy fee that goes to local governments, you can reduce the need for forced demolitions and cut the price of new properties,” he says.
2011-04-14 10:57 编辑：icetonado