Place reform on the agenda, expert says

However, the problem is whether China can grow at 7 percent or a little more for the next seven years. The economy does not now have the impetus of entry into the World Trade Organization to give it the drive it possessed before its admission into the body in 2001. Furthermore, exports to the US and Europe are falling as their economies suffer.

This is why China's urbanization program is so important, according to Huang.

"When Premier Li Keqiang talks about urbanization, he is talking about something different from the past," he said. "You cannot think of urbanization as just more building. That's dangerous. The critical question is, how can you support urbanization in ways that generate what I call 'sustainable demand': investment that is needed, consumption that will continue?"

What is "sustainable demand"? In Huang's view, subsidizing refrigerators is not sustainable because the raised consumption comes at the expense of future demand. In fact, there are a lot of aspects of China's urbanization that could be more sustainable.

For example, Huang said although the country's commercial housing development received a boost over the past decade, government-subsidized affordable houses remain insufficient. They are supposed to be rented to low-income residents who cannot afford to buy in the commercial market.

"You need to figure out a way to build affordable housing that is financially sustainable. It is not being done because builders don't find it profitable. But the reason is the way the land is being managed in these cities make it excessively costly," Huang said.

"About 50 to 60 percent of cities' housing stock is what I call old socialist housing. That land is potentially usable for affordable housing. The problem right now is they are developed by city officials in ways that often lead to inappropriate practices and excessively high prices," he said.

Huang said the way forward is for homeowners to partner with builders to share the development process so both sides are happy. And the city will make more money by levying construction and property taxes.

Currently common practice in China is for land or old buildings to be taken over by the government before they are developed. Owners are offered compensation, which is often regarded by owners as too low. Mandatory resettlements often lead to social grievances.

"Right now it is not possible for the owner of the socialist stock building and the tenant to actually develop the building. This is not an appropriate model by which to develop affordable housing. Moreover, a majority of affordable houses should be rentals and not for purchase. If you could do this, you generate construction building which is sustainable," said Huang.

There is also enormous demand to improve public transport in the urbanization program, he added.

"I often tell people Beijing is actually too small. It is not as densely populated as it should be. You look around Beijing and you see a lot of land that is not utilized or only half utilized. They are held by State-owned enterprises or as affordable housing for employees. Once they are redeveloped, considerable room could be made for affordable homes," said Huang.