Sources from the Ministry of Construction said they made plans for a draft regulation on housing assurance, and the outline was mapped out at a closed-door meeting last week. It is said the draft will be completed and submitted to the State Council for approval next year.

Xu Zongwei, Deputy Director of the Policy and Regulation Department under the Ministry of Construction revealed during a telephone interview with the 21st Century Business Herald that the regulation would be drafted based on the principles and guidelines stipulated in the August 13 circulation of the State Council.

This circulation requires that by the end of the 11th Five-year Plan period (2006-2010), the low-rent housing system be expanded to cover every urban low-income household. The statistics show the number of such households reached 10 million, accounting for 5.6 percent of the national total. However, there is currently no clear definition of "low-income" in relevant policies.

The ministry has recently promulgated Assurance Measures on Low-rent Housing and Measures for Management of Economic Houses. Unfortunately, the two measures don't touch on the problems of the middle-income class. In other words, the management and financial systems of economic houses, low-rent housing, and housing funds are separated under the current policies.

Experts predict the upcoming regulation would not provide more specific details than the existing two measures. The measures clarify the coverage, assurance standards, and methods as well as financial sources, while the regulation would define the responsibilities of relevant governmental departments concerning housing issues.

According to an official from the ministry, the government and the market are the main elements influencing the housing issue. The prices of commercial housing are determined by the market and the government is responsible for low-income families. The price-limited housing is aimed to curb soaring house prices and not fit for the housing assurance system.

Recently, the Beijing municipal government announced that families with an annual income lower than 27,000 yuan were qualified for economic houses. The original bottom line was 60,000 yuan. Meanwhile, housing authorities are encouraging people to rent rather than buy an apartment.

"The status quo of China's property market calls for a stable policy on economic houses," said the official, adding that some localities' successful experiences on economic houses would probably be considered in drafting the regulation. The regulation aims to cover just low-income families rather than middle- and low-income ones.

According to Tang Jun, an expert in policy research involved in the discussion on the new regulation, the policy on economic houses still has a vague future. "However, the middle-income families stand at the core of the housing issue," emphasized Tang.

Tang explained that President Hu Jintao only mentioned low-rent housing in his report at the 17th Party Congress while said nothing about economic houses. Recently, Premier Wen Jiabao also promised to develop a low-rent housing system during his visit to Singapore.

The middle-income families account for 20 percent of the total. Therefore, Tang called for the government to focus on economic houses rather than low-rent housing. "The proper policy of economic houses will compress the property market to business housing and high-grade residences. The prices of commercial residences will therefore slow down," he said.

Wu Xinmu, another expert in the field, doesn't agree with Tang. Wu maintains that most people should rent an apartment. The government should currently focus on construction of low-rent houses provided for low-income earners, young people, public servants, and farmer-turned workers. At the same time, the government should strengthen supervision on economic houses and relax controls on the commercial housing market.

Wu explained that such a strategy was determined by the slow housing construction in the past decades. It is impossible to fulfill everyone's housing demands in a short period.

The Ministry of Construction has started surveying urban residents' housing situations together with drafting the assurance regulation due to its tight schedule. Some localities, including Shenzhen City, have completed the survey. Moreover, Shenzhen is about to pass a local regulation to assure residents' housing.

Tang noted that the content of the national regulation would most likely draw heavily from the Shenzhen one, since the latter was drafted following the guidance of the ministry. Another expert maintains that the national regulation might be more general, "leaving management space for local governments."

(China.org.cn by Huang Shan, December 7, 2007)