Housing Ownership, Incomes, and Inequality in China, 2002–2007

Abstract

Introduction An important feature of the post-Mao period has been the resurrection of private property rights. A variety of interrelated policies, including the lifting of prohibitions on private enterprise, ownership reforms in industry, the development of stock markets, and real estate and housing reforms, have paved the way for the expansion of private property and household wealth, with implications for incomes and inequality. Estimates by Li, Luo, and Sicular in Chapter 2 of this volume, calculated using the 2002 and 2007 China Household Income Project (CHIP) surveys, show that the share of household income derived from financial assets and housing and their contribution to income inequality has increased, especially in urban China. In this chapter we examine changes in private ownership of housing and the implications for the distribution of housing wealth and income. We focus on housing wealth rather than on total wealth mainly because the CHIP 2007 data do not contain sufficient information to permit the estimation of total wealth. Housing wealth, however, can provide insights into the role of total wealth, because housing is the single most important household asset in China. Past studies of wealth in China have found that privately owned housing constitutes nearly 60 percent of household wealth and accounts for two-thirds of inequality in wealth among households (Li and Zhao 2008; Zhao and Ding 2008).