Mayor defends employee housing

Guangzhou's mayor has rejected criticisms that allowing state-owned enterprises to build affordable employee housing was a return to the pre-economic reform days of state-provided housing.

'The new policy is totally different from the old one,' Southern Metropolis News quoted Zhang Guangning as saying in Beijing.

The policy, which was formulated last year and made public recently, allows SOEs with land banks to provide cheap housing when the government is unable to meet demand. It stipulates that the enterprises should build units smaller than 90 square metres.

Seven SOEs, including Guangzhou Iron & Steel Enterprises Group and Guangzhou Shipyard, have received approvals. The first offering of 750 units by GISEG has been sold out at an average price of 2,000 yuan per square metre, 40 per cent of the prices of neighbouring units.

Guangzhou's rate of increase in property prices was among the five fastest on the mainland last year.

The policy has attracted strong criticism in recent weeks from experts who described it as a backwards step.

Property experts said it would hurt social equality and they doubted the government's ability to supervise transactions.

Guangdong Real Estate Association president Cai Suisheng told a professional forum that the policy might encourage corruption.

'We do not believe government supervision can be successful,' Mr Cai said. 'In the past, the government could not supervise its own. How can they monitor enterprises this time?'

A government research institute poll on Thursday showed that 70 per cent of interviewees were worried that the policy would create corruption and social inequality.

The distribution of flats as part of welfare policy ended in 1998.