Date
23 September 2017
Some owners of luxury properties have protested against a new rule in China demanding them to share certain common areas inside the compounds with the public. Photo: Fang.com
Some owners of luxury properties have protested against a new rule in China demanding them to share certain common areas inside the compounds with the public. Photo: Fang.com

Why Beijing wants private housing compounds to open up to public

Skyrocketing home prices in China have made life miserable for many grassroots families in the country and posed huge challenges for policymakers in the country.

Policymakers fret that if the disparity in living conditions gets worse, it could one day bring social unrest.

Wealth gap in China has been widening sharply in recent years. The nation’s Gini Coefficient, a gauge of economic inequality, soared to 0.465 as of last year from below 0.3 in 1980s, putting it above the international red line of 0.4.

We should evaluate China’s wealth gap from two perspectives. First, the gap between urban and rural areas remains striking.

For example, coastal cities in the eastern and southern provinces, such as Shanghai, Hangzhou and Shenzhen, witnessed living standards rise substantially, narrowing the gap with those in West. By contrast, many areas in central and western regions remain underdeveloped.

Chinese authorities have used fiscal transfer and policy initiatives to try to narrow the wealth gap. For example, the central government provided support to Guizhou province to help it become a big data powerhouse. Measures are also being studied to revive growth momentum in northeastern regions.

Another form of wealth gap exists within mega cities like Beijing and Shanghai, which has been worsening.

Authorities are concerned about the emerging trend of gentrification. Some existing urban districts have seen an influx of wealthier people and original poor residents have been forced to move elsewhere for cheaper rents and property prices.

As a result, the cities have seen the creation of both high-end luxury neighborhoods and poor communities. That would harm social stability in the long run.

Western nations have made great efforts in protecting longtime residents from negative impact from gentrification of neighborhoods. In a place like China, officially a socialist country, it is not surprising that authorities are waking up and giving more thought to the issue, paving way for some measures.

Beijing has ordered all residential compounds to remove walls surrounding their premises to share all roads and common areas within the compound with the public.

Unlike Hong Kong, China has not specified within the law whether a residential compound is allowed to build walls. Therefore, all the walls surrounding gated residential communities can be labeled as illegal, offering scope for demolition orders if deemed necessary.

This article appeared in the Hong Kong Economic Journal on Aug 30

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Hong Kong Economic Journal columnist

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