China to invest 1.3 trillion yuan in affordable housing

15:33, March 09, 2011      

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To fulfill the goal set by the Chinese government of building 10 million units of affordable housing for low-income groups, at least 1.3 trillion yuan of investment must be put in place. The question is: who will pay for that?

Qi Ji, deputy minister of Housing and Urban-Rural Development, is confident that the financing will not be a problem because various resources, especially those from the non-governmental channels, can be exploited.

At a press conference during the ongoing annual session of the National People's Congress in Beijing, the minister explained how that could be achieved.

The proposed 10 million units include residences to be sold to low-income groups with caps on sizes and prices, renovated slums and housing rent to low-income groups.

According to the plan submitted by local governments, nearly 2 million units will be built to be sold to low-income groups. About 500 billion yuan of investment is needed for that. A bulk of that will come from the free land allocation by local government, and the construction will be funded through market operation.

About 4 million units of slums will be revamped. Enterprises and individual owners of those slums will pay about 340 billion yuan of the 500 billion yuan needed for the project.

That means that more than 800 billion yuan will be accessed from off the balance sheet of public funding. The remaining 500 billion yuan plus will have to be provided by the central and local governments.

The central government has announced a 100 billion yuan commitment to affordable housing this year. Local public budget will contribute to the project. There are also several other ways for local governments to raise the funds.

Qi stressed that the compulsory bottom line of 10 percent investment of land transfer yields in affordable housing has to be strictly observed, and a ratio higher than 10 percent will be required where necessary. Some places have already raised that to 20 percent.

"That's a huge sum of money," Qi said. The revenue from transactions of state-owned land is worth 2.9 trillion yuan in 2010, more than doubled that of 2009.

Other sources include the public housing provident fund and bank credit. The policy of government subsidies of bank credits for affordable housing is currently being formulated, Qi said.

And it seems that a public-private partnership model will be adopted to develop the market of housing rental to low-income groups, he said. Through all those efforts, the 1.3 trillion yuan, he believes, will be guaranteed.

By Li Jia, People’s Daily Online

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