What does the rampant demolishing of houses to build modern structures entail? Two experts lock horns over this important issue, which affects almost every person in this country.

Chen Huai: Old houses have to go for greater good

Extensive urbanization has been going on in China for the past 10 years. According to what some Ministry of Housing and Urban-Rural Development officials say, all houses built before 1999 that is, half the existing buildings, will be razed in the next two decades.

China's urbanization drive has four goals: improvement of the housing guarantee system and building more low-rent houses; solving the housing problem of migrant workers; renovating the cities' dilapidated and old buildings; and improving people's living conditions.

Since three of the four stages of China's urban development were under unusual historical conditions, houses built during those periods need to be demolished. Houses built before 1949, when China was still a small-scale agricultural economy and fighting foreign invaders and tyrant nationalist rulers, do not meet today's urban development requirements. All such houses, except those with historical value such as the Huangpu Military Academy near Guangzhou, have to be replaced with new structures.

The residential quarters built for workers in the 1950s are one of the two main types of structures that came up between 1949 and 1979. According to the National Bureau of Statistics, 2.8 million such "shanties" have been earmarked for demolition this year. Houses built in the 1960s and 1970s, when the country was preparing to fend off a possible attack from other countries, were only for short-term use. Many of them were built with only a few community kitchens and toilets, and have to be razed.

Houses built between 1979 and 1999, when China lifted millions of people out of poverty, can be used for another 10 to 15 years, though even they don't meet the requirements of long-term urban development. Hence, they have to be demolished between 2021 and 2030, when people are expected to have more economic power and thus demand better living conditions.

The government has met most people's housing needs in the past three decades. But there's still a lot of room for improvement, because on average an urban family has only 60 square meters of living space. Besides, some people in cities still don't have a house of their own.

To improve housing and living conditions, the government should focus on two fronts. First, it should expedite the construction of low-rent houses to meet the housing demand of about 150 million migrant workers and 200 million farmers in and around small towns. Second, it has to help the needy to improve their living conditions.

China's real estate industry can thus look forward to at least two decades of development and profit.

The government has issued a set of policies over the past three months to check skyrocketing housing prices. But its aim is not to check housing demand from rising, but to curb speculation by property developers. It has retained its loose monetary policy, which was part of its $586-billion economic stimulus package. This means real estate developers can still get bank loans at a low interest rate and the housing market boom will continue. It takes five to 10 years to develop a fully functional community. For example, only a few people moved into Beijing's Wangjing neighborhood in the first 10 years of its development. Today, the area is seeing the fastest house prices rise in the city.

But different grades of houses have different percentages of occupancy. Houses built for ordinary middle-class people may have an 80 percent occupancy rate. But apartments built for higher-income groups might have just 60 percent occupancy, with the rate for villas falling further to about 30 percent.There's a sharp conflict between skyrocketing housing prices and the relatively low incomes of the people. Western countries have undergone similar experiences, and China is expected to solve the problem in the short term.

China's has been a great economic success story. Its cities have seen the fastest growth of white-collar workers in the world in the past decade. It may take another 20 to 30 years for China to resolve the conflict between high housing prices and relatively low incomes of the people. But it will still be the fastest among all industrialized and urbanized countries.

The author is director of China Urban-Rural Construction and Economic Research Institute, affiliated to the Ministry of Housing and Urban-Rural Development. This is part of the speech he delivered at a recent public housing forum.