Financing Affordable Housing Through Compulsory Saving: The Two-Decade Experience of Housing Provident Fund in China

Abstract

Housing Provident Fund (HPF), a compulsory saving scheme providing self-funded housing credit, is a significant provider of housing finance in several emerging economies. The Chinese HPF program constitutes the largest social housing finance program in the world. Yet, very few studies have examined it. This paper documents the history of China's HPF program, in particular, how it has evolved from a local experiment to a prominent national housing program. It then examines the program's management structure and the role of HPF lending in meeting China's housing finance needs. The paper also compares China's HPF experience with the HPF practices in other countries. Finally, the paper examines the challenges China's HPF program faces today and the efforts to address them. The paper concludes by discussing some of the broader lessons that can be learned from China's HPF experience.