China wants to follow the West and make home ownership an engine of growth in its economy. Incomes, however, are too low, bank finance almost impossible and the old state system of housing at peppercorn rents too entrenched.
In a recently published speech, Vice-Premier Zhu Rongji said buying a home would become the most important item in the long-term budgets of Chinese people, and homes must be built costing about 1,000 yuan per square metre (about HK$86.7 per sq ft).
He was speaking at a national conference in Chengdu, which aimed to increase the supply of homes for low-income families, raise rents on public housing to encourage people to buy instead of rent, and increase the number of housing funds to which firms and their staff contribute. Individuals can borrow from these funds to buy their own homes.
Mr Zhu held up Shanghai as a model. It has sold 52 per cent of its public housing stock to tenants. The proportion in some cities in the south and east has reached 70 per cent to 80 per cent, sold at production cost or below.
The Government wants to turn housing for its 200 million urban residents from a form of welfare into a commercial market, to absorb some of the record level of personal bank deposits - 3.85 trillion yuan (about HK$3.58 trillion) at the end of 1996 - and stimulate growth in construction and related industries.
China has about 60 million sq m of empty housing too expensive for the vast majority of people to buy.
Mr Zhu said these homes were an enormous waste for the national economy. Of the total, the selling price of 35 million sq m is about 2,000 yuan per sq m. He said the Ministry of Construction must work with local governments to find ways to sell these 35 million at 1,500 yuan per sq m or less.