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Opinion / You Nuo

Offer young professionals a true sense of security
By You Nuo (China Daily)
Updated: 2006-06-12 05:44

The Chinese-language press has been reporting over the past couple of
weeks that the buying and selling of housing has come to a standstill in
the nation's large cities.

This comes soon after the release of the central government's policy
package on the urban property market.

No doubt these policies, especially the ones which stipulate that 70 per
cent of new housing must have a floor space of less than 90 square metres
and that the selling of any units within five years of their purchase
will be subject to a business tax, are having an impact by temporarily
dampening enthusiasm for real estate investment.

But this is only the first step. Judging from the significant role played
by this industry, especially in cities such as Beijing and Shanghai, much
more work needs to be done.

The role of the urban housing market is twofold first and foremost to
provide somewhere to live, but, more importantly, to provide a sense of
security.

It is that sense of security that is crucial to keep a growing and
relatively satisfied new middle class in this country, primarily the
young and middle-aged salary earners who staff the professional services
needed by a modern and internationally competitive economy.

In the meantime, the established middle class, meaning relatively older
employees from State-sector companies and institutions, also deserve
their fare share. Many of them were allocated housing during the era of
the planned economy. But those houses may be old or in rundown
neighbourhoods, and they may be expecting to replace them for better ones.

To assure those people of decent living conditions, or to be satisfied
with their housing while enjoying their work, is a long-term mission of
the government. While there is no point in bringing housing distribution
under the direct control of government agencies as in the past, which had
many loopholes anyway, long-term policies are required to protect at
least part of the market from the wild impulses of the stock market.

Indeed, separating the housing market for middle-class owners and that
for investors, whenever and wherever that is feasible, is what the
municipal officials should start considering in Beijing and Shanghai.

Young professionals and service employees in those cities should be
provided with the housing with the best access to the public transit
system and other publicly funded infrastructure. And in the long run,
this will bring greater benefits to the city's GDP than merely building
and selling houses, as all business executives will agree.

As for the retired workers, they deserve greater payments when the land
they occupy is acquired by the government for re-development. And this
should not be difficult, judging from the usual mark-ups for the urban
land. Private developers should also be asked to contribute to a welfare
fund to provide additional money for the relocation of retired workers to
new neighbourhoods.

Of course, part of the market will remain open to investors, if they
prefer to take risks in the housing market rather than the stock market.
But they should only be allowed to speculate on designated buildings and
areas that will not affect the general lifestyle of the city, such as
high-class office buildings and luxury residential units on the outskirts.

With regard to wealthy immigrants to large cities, it would only be fair
for them to pay for not just housing (if they have above-average demand)
but also the facilities they are going to enjoy. If they are unhappy with
certain things, those special homeowners can easily raise money among
themselves to improve them.

The key, however, is always to help the young professionals, service
workers, and whoever are the Chinese cities' future builders stay where
they are and be happy, because they help China remain stable and
productive.

Email: younuo@chinadaily.com.cn

(China Daily 06/12/2006 page4)

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