Ebook institutionalization of state policy evolving urban housing reforms in chi

Dynamics of Asian Development Miao Zhang Rajah Rasiah Institutionalization of State Policy Evolving Urban Housing Reforms in China Dynamics of Asian Development Series editor Anthony P. D’Costa, Carlton, Australia Editorial Board Tony Addison, Helsinki, Finland Amiya Bagchi, Kolkata, India Amrita Chhachhi, Rotterdam, The Netherlands Akira Goto, Bunkyo, Japan Barbara Harriss-White, Oxford, UK Keun Lee, Seoul, South Korea R. Nagaraj, Mumbai, India Rene E. Ofreneo, Baguio, Philippines Rajah Rasiah, Kuala Lumpur, Malaysia Ma Rong, Beijing, China Ashwani Saith, Rotterdam, The Netherlands Gita Sen, Bangalore, India Andrew Walter, Melbourne, Australia Christine Wong, Oxford, UK More information about this series at http://www.com/series/13342 Miao Zhang · Rajah Rasiah Institutionalization of State Policy Evolving Urban Housing Reforms in China 13 Miao Zhang Rajah Rasiah University of Malaya University of Malaya Kuala Lumpur Kuala Lumpur Malaysia Malaysia ISSN 2198-9923 ISSN 2198-9931 (electronic) Dynamics of Asian Development ISBN 978-981-287-569-3 ISBN 978-981-287-570-9 (eBook) DOI 10.1007/978-981-287-570-9 Library of Congress Control Number: 2015940983 Springer Singapore Heidelberg New York Dordrecht London © Springer Science+Business Media Singapore 2015 This work is subject to copyright.

All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication.

Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer Science+Business Media Singapore Pte Ltd. is part of Springer Science+Business Media (www.com) To the memory of Nelson Mandela who viewed humans of all colour, class and creed as one Preface The sustained expansion of China’s economy has attracted considerable studies. While some consider the expansion to continue, many question its sustainability.

The main detractors regard the Chinese economy to combust from overheating, climatic damage and civil unrest from the lack of open democratic space. This book focuses on the urban housing sector to analyze how market reforms since 1978 have impacted on China. The decentralization of policy planning that fol- lowed since has differentiated policy making into different levels of government. Institutional change has transformed the role of state-owned enterprises (SOEs) in China’s urban housing sector, which can be divided into three distinct phases with the first phase characterized by in-kind housing construction and allocation, the second phase by SOEs’ contribution to Housing Provident Fund and participation in publicly owned houses sale campaign, and the third phase led by participation in housing investment, speculation, and affordable house provision.

As an instru- ment of the state, institutions have conditioned the SOEs to deliver affordable housing. As the intermediate between the central and municipal governments, provin- cial governments have begun to play a major coordinating role to ensure that the goals set by the central government are carefully coordinated with municipal gov- ernments for implementation. Leadership, legislative, land use, and living culture were used to show how institutions have evolved to shape urban housing policies in Shandong and Shanxi. In addition, this book shows how institutions have influ- enced policy implementation by analyzing the role of the Qingdao government in policy transmission through delivery, diffusion, calibration, and finalization.

By actively shaping coordination between the provincial and central governments, institutions help municipal governments consolidate the interests of various play- ers to meet the interests of the people. The findings support the role of the developmental state in restructuring pro- duction relations. Unlike a single complex superstructure as claimed by most Western analysts, the institutionalization of governance structures in China has taken place through a strong coordination between central, provincial, and munici- pal governments to meet targeted plans. Although the central government has vii viii Preface attempted to decentralize its planning functions since economic reforms began, for such a large country and one that is characterized by a wide diversity of cultures, inevitably the evidence we provide is largely applicable only to eastern and central China.

Hence, while China has a long way to go to become developed, as well as democratic to enable strong mass participation in policy-making, it offers a unique alternative for countries seeking to strike a balance between capitalist and socialist instruments. We wish to take this opportunity to thank the contribution of several per- sons that were important in the preparation of this book. The encouragement of Zhang Miao’s parents, Zhang Jin and Fu Jun, and grandfather Zhang Jinjian is the most important. We are grateful to Dr.

Cheong Kee Cheok who shared with us his vast knowledge of Confucian society. Finally, we are thankful to Tan Sri Ghauth Jasmon and the Brightsparks committee for offering Zhang Miao a schol- arship, which financed the preparation of her thesis for the award of a Ph. at the University of Malaya.2 Problematizing Urban Housing in China.3 Research Questions and Objectives.4 State-Owned-Enterprises.5 Outline of Book.2 Theory and Evidence.3 A State in Transition. 27 3 Methodology and Data.4 Research Mode and Data.

38 4 The Transformation of State-Owned Enterprises .4 Evolving Role of SOEs in Urban Housing Sector.1 Phase 1: Constructor, Distributor, and Property Manager (1978–1988) .2 Phase 2: Transformation Role (1988–1998).3 Phase 3: Developer, Investor, and Speculator (1998–2013). 62 5 Intermediary Role of Provincial Governments .2 Theoretical and Methodological Considerations.4 Contrasting Institutional Experiences. 88 6 Implementation Role of Municipal Governments.3 Methodology and Data.4 Institutions Governing Policy Implementation .1 Policy Delivery by Government and Social Organizations.2 Policy Diffusion by Social Media .3 Policy Calibration by Public Hearing.4 Policy Finalization by Legislation.2 Synthesis of Findings.3 Implications for Theory.4 Implications for Methodology.5 Implications for Policy. 129 Abbreviations CPC Communist Party of China CPD Central Publicity Department CPPCC Chinese People’s Political Consultative Conference CRH Cheap Rental Housing Program DoHURD Department of Housing and Urban–Rural Development ECH Economic comfortable housing program HPF Housing Provident Fund Program HSC Housing Security Center HSN Housing Security Network IAD Institutional Analysis and Development ICT Information and communication technologies LUT Land use tax NPC National People’s Congress NPCSC Standing Committee of the National People’s Congress PCH Price-capped Housing SAI Structure-Agency Institutional SASAC State-owned Assets Supervision and Administration Commission SOE State-owned enterprise xiii Chapter 1 Introduction Abstract Since economic reforms began in the 1980s, the central economic plan- ning system of China has undergone profound institutional changes with the gov- ernance structure in urban housing market experiencing significant restructuring.

The evolving institutional arrangements in urban housing sector have transformed the role of the key institutional players, such as state owned enterprises (SOEs) and provincial and municipal governments. This chapter problematizes the inter- actions between the different players to set the direction for the analysis in the subsequent chapters. The key concepts pertinent to this study are also presented here. Particular focus is placed on the changes experienced by the SOEs, and the governance relationships between the central, provincial and municipal govern- ments in the delivery affordable housing in urban locations in China since eco- nomic reforms were launched in 1978.

Keywords Urban housing · Institutions · State-owned-enterprises · Provincial government · Municipal government · China 1.1 Introduction This book examines the role of state-owned enterprises (SOEs), as well as, the provincial and municipal governments in new institutional arrangements that have emerged in China’s urban housing sector since market reforms were launched in 1978. Although considerable work already exists to explain economic transition,1 this book provides a fresh analysis of how a wide range of institutions have helped to shape the urban housing landscape of China. The central economic planning system has undergone profound institutional change with the governance power structures in urban housing market experi- encing significant restructuring (Perkins 2014a, b). Western accounts of market reforms are still dominated by accounts of China being dominated by an extractive 1See for example, Woo (2011), Yueh (2013), Rasiah et al.

© Springer Science+Business Media Singapore 2015 1 M. Rasiah, Institutionalization of State Policy, Dynamics of Asian Development, DOI 10.1007/978-981-287-570-9_1 2 1 Introduction state that has continued to shut the doors to peoples’ participation in the govern- ance structures (see for example, Acemoglu and Robinson 2012). While China’s overall governance structure is still socialist, we attempt to show that such accounts are devoid of a proper assessment of institutional change as China is so large and diverse. Such accounts are particularly not very reflective of Eastern and Central China.

Institutions that were suppressed before 1978 have since re- emerged in new forms to influence the transition process in contemporary China. In addition to explaining the emergence of new forms of governance structures, this book also presents empirical evidence on how they have impacted on the eco- nomic structure of Eastern and Central China. This introductory chapter is made up of 5 sections. It starts with research back- ground where housing reforms triggered institutional changes in urban housing market of China.2 provides problem statement, followed by motivation of study in the next section.3 presents research questions and objective.

The key concepts will be reviewed in the Sect.4 before the outline of the book is presented.2 Problematizing Urban Housing in China The provision of housing remains a severe challenge to most countries, in par- ticular among the developing and transition economies. Despite the fact that the size and characteristics of the housing sector varies across countries, the provision and access to affordable housing remains a serious social issue for a large pro- portion of the population of most countries regardless of their development status. According to United Nations Human Settlements Program, over 1 billion people were living in slums in extremely poor living conditions in 2010 (Majale et al. Furthermore, it is estimated that over the next two decades, more than 2 bil- lion people will add to the growing demand for housing and basic infrastructure services.

The situation is more severe in the developing economies where the fed- eral state often leaves it to local authorities to allocate resources to meet the hous- ing needs of the entire population. Asia is urbanizing at the fastest rate in the world. Estimations suggest that the urban population of the continent will double to 3.4 billion between 2010 and 2050, which means that the most crowded Asian cities will have to accommodate approximately 120,000 new residents on average every day with approximately 20,000 housing units demanded daily (Majale et al. Under such circum- stances, Asian countries have to strive hard to implement socially friendly hous- ing programs and policies that will have to be delivered with effective institutional change over the next few decades.

With a population of over 1.3 billion in 2014 housing provision in China poses a great challenge to the government. Houses were treated as welfare items that were produced and distributed by State Owned Enterprise (SOEs) to citizens before eco- nomic reforms (Zhao and Bourassa 2003; Li 2010) based on a set of non-monetary 1.2 Problematizing Urban Housing in China 3 Table 1.1  Periodization of urban housing reforms, China, 1978–2012 Stage Time Characteristics Pilot experimental 1978–1991 Reform experiments were conducted stage Double track phase 1992–1997 Privatization of production and consumption; both supply-side and demand-side programmes introduced Marketization phase 1998–2012 Abolishment of the welfare allocation of housing. Market assumes pivotal role Source Adapted from Li and Yi (2007) factors, such as, job rank (Huang and Clark 2002), education (Wu 2004; Fan et al. 2009) and hukou status (household registration system) (Huang and Clark 2002; Huang 2003; Wu 2004; Li and Huang 2006; Fan et al.

2009; He et al.