Premier Wen Jiabao's renewed emphasis on offering public rental housing foreshadows the government's relentless efforts to provide low- and middle-income families with affordable accommodation at a time when many ordinary people, especially low-income families, cannot even dream of entering the housing market.

At its executive meeting chaired by Wen on Monday, the State Council, the country's Cabinet, ordered local governments to build more affordable houses, especially low-rental housing units, in urban areas for low-income families, newly employed houseless laborers and migrant workers with stable jobs. Such houses should be about 40 square meters and their rents below market levels.

Though the State Council has promised to increase subsidies for such housing projects, it has urged local governments to allocate more funds for them. For some years now, the central government has been urging local authorities to build more affordable houses, but the latter have made little progress on this front, blaming the lack of funds for their failure. To solve the problem of insufficient funds, the central government has allowed local governments to borrow money from financial institutions through qualified local government financing vehicles and increase their land sale premiums and bond issuances.

Apart from assisting low-income families in urban areas, the central government's emphasis on building more affordable houses (both for sale and rentals) is also considered an effective way of containing rising housing prices and facilitating healthy development of the property market.

The central government has vowed to build 10 million affordable houses this year and another 26 million in the next four years. But raising funds remains a challenge.

Ministry of Housing and Urban-Rural Development data show work on 86 percent of the 10 million units had been started by the end of August, but media reports have revealed that the figures provided by some local governments are either false or exaggerated. As long as the GDP-centric performance assessment remains unchanged, local governments cannot be expected to expedite construction of subsided houses. The reason is simple: such houses do not generate profit.

Wen's latest emphasis on affordable housing projects demonstrates the government's resolve to set things in order. But the government also has to devise an effective and strict way of allocating affordable houses so that the genuinely needy are the first to get access to the limited number of housing units.

Besides, the government should work out concrete and practical details as soon as possible to ensure a certain percentage of the affordable houses are distributed among migrant workers, a group that has long been kept out of the loop for want of hukou (house registration) in cities.

(China Daily 09/24/2011 page5)