Housing reform in China: rational interests gone wrong or organizational design failure?

Abstract

China's housing policy has gone through a radical shift during the reform era: first, a focus on provision of social housing, partly through state institutions like state-owned enterprises; second, a gradual opening up of a commercial housing market; and third, most recently, an emphasis on the market aspects of housing with social housing being very much under pressure and decreasing in importance. Observers have noted that this third phase has been marked by lack of coherence, ambiguity and a number of adverse outcomes, especially with respect to affordability and access for the poor. What accounts for the nature of these challenges and tensions in housing policy? Two broad frameworks of analysis are deployed to explore this question: first, a rational interests perspective, and second, an organizational design or ‘instrumental-structural’ perspective. The first approach gives a good account of the dominant role of powerful interests, ‘short-termism’ and neglect by decision makers of key social groups. The second approach fills in some gaps in this account by showing how structural features in central–local relations and mechanisms of policy coordination and control have also contributed to the outcomes. Structural and financial reforms are needed in order to help correct the policy failures.