China Plans To Rebuild Key Policy

CHINA has announced plans to phase out one its biggest welfare provisions: virtually free housing for 200 million city dwellers. Admitting that its decades-old public housing policy has failed, the government has proposed controversial reforms aimed at gradually making urban residents buy accommodations.

People should abandon the ``obsolete concept'' of state-supplied housing and view homes as commodities, Zhang Yuanduan, director of China's Housing Reform Office, told the official China Daily earlier this month.

The government spends some $6.3 billion annually to build and maintain public housing. But urban rents of pennies a month do not even cover the cost of repairs.

Proposed reforms would raise rents and put more public housing up for sale to recoup funds for new construction. About a fifth of city dwellers have inadequate housing ``or no housing at all,'' official statistics show.

In Shanghai, draft plans would initially double rents while granting workers housing subsidies to offset the burden. The city would also sell five- and 10-year bonds to workers and create a public fund to raise more than $1 billion for housing construction in the 1990s.

``If we can do this, it will be a breakthrough,'' says Wu Baozhang of Shanghai's Housing Reform Office. The reforms, if approved, will begin next year, Wu says.

China began experimenting with housing reform in pilot cities in 1988, but the project stalled because many workers lacked either the money or desire to own homes.

``Wages are low in China, so we can only gradually reform housing with the development of the economy,'' Wu says.