The allocation and misallocation of economic housing in Beijing: Target groups versus market forces

Commencing in the 1990s, market reforms, high rates of urban growth and dissolution of public-subsidized housing created cumulatively a speculative property boom in Beijing. Economic housing was meant to provide affordable housing to low and middle income residents. But with the state earnest in using property market to promote GDP growth, political commitments were weakened and resources allocated went scarce. Non-target middle class “free riders” were also let into economic housing by developers to generate higher profit. The paper investigates the causes of misallocation of economic housing in Beijing. A housing survey was conducted to look into the competing interests in two starkly contrasted economic housing clusters - inner city resettlement and middle-class neighbourhoods. This paper aims to address the importance of balancing the growth-led policy with social equity and redistribution of public resources. An excessive emphasis of the former would deprive the latter of social justice and more equitable distribution. Short-term and longer term solutions are proposed.