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'Second Housing Reform' Desirable for Catalyzing Post-Pandemic Economy

Apr 01-2020   



Taking into accounting the economic impact of the pandemic and the future trends of the Chinese economy, Prof. Xu Yuan of the NSD has raised a distinctive policy proposal: China should carry out a ‘second housing reform’ with migrant workers as the target group. He reiterated his views during the recent National Development Forum Online by the NSD.

 

The reform as he defines will see large-scale construction of social housing and provision of public services to facilitate hundreds of millions of migrant workers to truly integrate into cities. As such, human capital will be enhanced, social resources saved, and latent economic momentum liberated.

 

According to his analysis, the outsize impact of the pandemic has rendered fiscal, monetary, and industrial policy feeble in leeway. Moreover, current real estate policies are averse to using housing investment for stimulating the economy for fear of aggravating the wealth gap.

 

China is in need of another major maneuver to jolt and expand both the internal and the external demand. The second housing reform, if implemented, can largely address the former, while the latter calls for a second opening up, as compared to the first opening up enabled by China’s accession into the WTO.

 

The second housing reform might prove to be an ideal policy with both short-term and long-term efficacy. If 10 million units of social housing, at 50 square meters per unit, are built every year, the reform will entail 10 trillion yuan of annual investment, which in turn will generate higher income and pull other investments. Consequently, an additional 3% increase in annual GDP growth can be expected to fuel the economic recovery.

 

If the policy is sustained for ten years and coupled with the second opening up, an annual growth rate of 5% and above can be achieved in the 10-15 years to come, which will spur the economy to double in size in year 2035 and turn the nation into a modernized one.

 

Besides economic growth, the second housing reform might help improve social comprehensive governance in the long term. In 10 years’ time, 300 million migrants will move into cities and become urban citizens, effectively shattering the current binary social structure.

 

China’s first housing reform began in 1998 and has brought about housing commercialization predominantly for urban residents. The second housing reform, with migrant workers at the core, will push urbanization onto a higher plateau: metropolis-ation.

 

As policy advice, the second housing reform inherently has many ends to tie. In terms of location, Prof. Xu believes that the social housing should be built in centrally located cities and metropolitan areas. Small cities should be eschewed, as buyers will be scant.   

'Second Housing Reform' Desirable for Catalyzing Post-Pandemic Economy

Apr 01-2020   



Taking into accounting the economic impact of the pandemic and the future trends of the Chinese economy, Prof. Xu Yuan of the NSD has raised a distinctive policy proposal: China should carry out a ‘second housing reform’ with migrant workers as the target group. He reiterated his views during the recent National Development Forum Online by the NSD.

 

The reform as he defines will see large-scale construction of social housing and provision of public services to facilitate hundreds of millions of migrant workers to truly integrate into cities. As such, human capital will be enhanced, social resources saved, and latent economic momentum liberated.

 

According to his analysis, the outsize impact of the pandemic has rendered fiscal, monetary, and industrial policy feeble in leeway. Moreover, current real estate policies are averse to using housing investment for stimulating the economy for fear of aggravating the wealth gap.

 

China is in need of another major maneuver to jolt and expand both the internal and the external demand. The second housing reform, if implemented, can largely address the former, while the latter calls for a second opening up, as compared to the first opening up enabled by China’s accession into the WTO.

 

The second housing reform might prove to be an ideal policy with both short-term and long-term efficacy. If 10 million units of social housing, at 50 square meters per unit, are built every year, the reform will entail 10 trillion yuan of annual investment, which in turn will generate higher income and pull other investments. Consequently, an additional 3% increase in annual GDP growth can be expected to fuel the economic recovery.

 

If the policy is sustained for ten years and coupled with the second opening up, an annual growth rate of 5% and above can be achieved in the 10-15 years to come, which will spur the economy to double in size in year 2035 and turn the nation into a modernized one.

 

Besides economic growth, the second housing reform might help improve social comprehensive governance in the long term. In 10 years’ time, 300 million migrants will move into cities and become urban citizens, effectively shattering the current binary social structure.

 

China’s first housing reform began in 1998 and has brought about housing commercialization predominantly for urban residents. The second housing reform, with migrant workers at the core, will push urbanization onto a higher plateau: metropolis-ation.

 

As policy advice, the second housing reform inherently has many ends to tie. In terms of location, Prof. Xu believes that the social housing should be built in centrally located cities and metropolitan areas. Small cities should be eschewed, as buyers will be scant.