The effectiveness of the economical and suitable housing scheme in Beijing, 2007-2012 : an evaluation and explanation

Abstract

As the principal subsidized home ownership housing scheme in Beijing, the Economical and Suitable Housing Scheme (ESHS) has gone through several different stages in the past three decades. Following the newly developed housing policy framework in 2007, ESHS was endowed with the objective of providing affordable home ownership to low-income urban residents.

Despite the rich literature on ESHS in China, relatively little is known about the performance of estates of ESHS in Beijing developed after 2007 under the new regulations. Largely missing from the existing literature is an analytical account of the development of ESHS in Beijing and an in-depth evaluation and explanation of its performance in recent years. This study thus aims to examine and analyze the effectiveness of ESHS since 2007 with the intention of helping to improve the effectiveness of ESHS and to provide useful lessons to other subsidized housing schemes in Beijing.

Following the lead of scholars who have studied subsidized housing schemes in other countries and areas, this study built up its own analytical framework appropriate to the Chinese context. To achieve the study goal, the evaluation of the performance of ESHS was conducted in terms of four indicators: housing affordability, housing accessibility, housing availability and housing quality. The investigation of the causes were conducted from the public policy perspective focusing on policy design and policy implementation. To enhance the data base, open-ended interviews with officials at different levels from different government departments and structured questionnaire surveys with residents in ESHS in Beijing had been conducted.

This study reveals that the performance of ESHS after 2007 was barely acceptable. Specifically, the housing affordability and housing accessibility and housing quality of ESHS were less than satisfactory. Even though the housing availability of ESHS in quantity terms did not have significant problems, the housing availability in terms of location was highly undesirable. As for housing affordability, it is found that the ESHS was more affordable to urban residents than to suburban residents, the major reason being the higher income enjoyed by the former. Regarding housing accessibility, this study found that the approach to determine the eligibility criteria of ESHS failed to include all the households who could not afford to purchase market housing. In the housing quality domain, it is found that ESHS housing estates in Beijing failed to meet the residents’ daily needs, and suffered from poor housing construction quality and inconvenient locations.

In addition to the evaluation of performance, this study also found that besides the strong commitments from the government, policy design commensurate with policy goal and effective policy implementation determines the performance of a subsidized housing scheme. In particular, the formulation of eligibility criteria and the pricing mechanism at the policy design stage, and the conflicting interests of the three levels of government at the implementation stage were most critical. This study further argues that the four dimensions of performance which were inter-connected to each other were all commonly hinged upon the use of land as the main source of subsidy.

This study adds to the existing literature on contemporary China by evaluating and explaining the most recent performance of a dominant housing subsidy policy tool in China. By constructing and employing a comprehensive conceptual framework for the analysis, this study offers to the contemporary China literature a sophisticated yet revealing conceptual tool to unveil the intricacies of housing subsidies in the rapidly changing China.