China's government will spend nearly $200 billion this year to build 10 million low-cost homes, a Cabinet official said Wednesday, amid efforts to spread the benefits of economic growth to the poor and rein in surging housing prices.
Beijing has unveiled an array of measures including higher wages and subsidies as part of ambitious promises to narrow a politically volatile gulf between rich and poor and transform a nation of farmers and factory workers into a consumer society.
This year's housing spending is part of a commitment to construct 36 million low-cost homes over the next five years, said a deputy housing minister, Qi Ji, at a news conference during the annual meeting of China's legislature.
Surging housing costs despite government efforts to cool an overheated market have become a political sore point. The increase has pushed owning even a small apartment beyond the reach of many ordinary families despite economic growth that hit 10.3 percent last year.
"In the next few years, we are going to significantly improve housing conditions for urban middle- and low-income families, newly employed workers and migrants," Qi said.
The central government will pay 500 billion yuan ($76 billion) of this year's planned 1.3 trillion yuan ($198 billion) cost, Qi said. The rest will come from local governments, other entities and revenue from residents.
In January, the price of newly built housing rose 6.8 percent in Beijing and 1.5 percent in Shanghai over a year earlier, according to the government. Some smaller cities saw bigger increases -- 21.6 percent in the southern city of Haikou and 14.2 percent and 12.3 percent in the central cities of Yueyang and Ganzhou.
Chinese authorities blame speculators and regulators have tried to discourage them by raising minimum required down payments, curbing mortgage lending for second homes and barring purchases by some buyers. Shanghai and the southwestern city of Chongqing have imposed a sales tax on real estate to reduce profits for sellers.
"One of the key points that we currently are trying to control is to postpone purchases by those consumers who don't need to settle down and buy houses urgently," Qi said.
The government also plans to regulate rental prices, said another housing official, Shen Jianzhong. He said legislators were working on a "real estate law" to determine conditions and the rights of renters.
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