Government Officials Buy Housing at 4% of Market Value

The following is a translation of this recent article posted on Southern Weekend. The article discusses the issue of low-priced housing available to public officials through their departments. In some extreme cases, public officials pay only 4% of the total market value, such as in the Xizhimen area of Beijing.

Translation

Throughout the country, housing prices have been rising steeply, so much so that the government has recently had no choice but to institute new policies to try and curb costs. The government’s hand has been forced in light of a recent publication titled “Public Officials Buy Houses at Astonishing Prices”, which after its publication became widely read throughout the internet. Compare the price [public officials pay] with the going rate for similar housing in the same area:

Mortage Slave

Housing for city officials in the Qiaoxi district of Shijiazhuang City costs 4,000 RMB/meter, where the market price is 30,000 RMB/meter. In Beijing, public officials can buy housing in Xizhimen, near the railroad tracks, for 2,000 RMB/meter. The market price in this area is 50,000 RMB/meter. Also in Beijing, the market price for housing in Guangqumenwai area goes for 35,000 RMB/meter, whereas public officials only pay 4,500 RMB/meter [….]

As soon as this publication was posted, it received a huge reaction [from the public]. But what has really caused public opinion to buzz is that the claims in this article have been verified. [Southern Weekend] has interviewed Beijing Institute of Technology professor Hu Xingdou, an avid observer of issues relating to fairness and justice.

Southern Weekend: According to what you know, is this type of situation common in Beijing?

Professor Hu: Many central government departments purchase affordable housing for public officials. They also build low-cost commercial housing. All of these houses are within the second and third rings of the city where costs average between 20,000 to 30,000 RMB/meter. If public officials are buying houses for only between 3,000 – 5,000 RMB/meter, then they are saving anywhere between 2 – 3 million RMB in total, and in some cases as much as 4 – 5 million.

SW: How do you view this phenomenon of public officials benefiting from limited housing costs?

Hu: This problem […] was very unexpected. It’s a classic case of using abusing public authority for private gain. It is a serious case of corruption.

SW: Some people say that this is a case of public officials legally benefiting [from their position]. How do you feel about this?

Hu: This is absolutely illegal. Public officials should [be treated] just the same as ordinary citizens—they should have to go out into the market and buy commercial housing. Their income is not any lower than others. There’s no reason for them to receive such benefits.

House Shopping

SW: Do public officials enjoy better benefits than ordinary citizens?

Hu: Public officials truly are enjoying better benefits than ordinary citizens. Such benefits include housing, government-issued cars, meal reimbursement, retirement funds, and medical insurance. The current system has turned public officials into a privileged class, which was inevitably brought about by the expansion of the government’s power. Such power has continued to grow since the introduction of policies to reform the country’s political and economic systems [starting in 1978]. This power has largely seeped into the market, and has not been restricted. Some central government departments are using their special power for private gain. Local government subordinates follow the example set by their superiors, and in many cases go even further.

SW: Will the new regulations suppress rising house costs?

Hu: In the short run, the policies will have some affect. Prices may go down temporarily. [The aforementioned government] departments have already halted this [corrupt] behavior. However, as soon as these rumors pass, this type of phenomenon may reappear. The root of the problem lies in [the fact that] there is no limit to the government’s power [….]

SW: [The government] has recently legislated the “Housing Protection Act”. What are your thoughts on this new regulation?

Hu: If it’s supervised well, it will be great [….] I think it ought to limit the housing that public officials can purchase, unless the public official in question falls within the lower-income bracket, but this is impossible.

SW: Many people say that the government will never issue laws or policies which limit their benefits.

Hu: The important thing here is that the government listens to and respects public opinion.

SW: Which country do you believe handles issues of housing, house prices, etc. well?

Hu: Actually, all countries handle this issue better than China. In Singapore, for example, 86% of citizens have adequate housing. In regards to affordable housing, both the public and the country have property rights […] so housing prices in Singapore are high, but everyone has the ability to buy a house. Aside [from Singapore], in northern Europe, in countries such as Sweden, protected housing comprises 30 – 40% [of the market], but in China it’s just 10%, and in some places [in China], as low as about 5%, with [much of the protective housing] being owned by the rich.

SW: Why is it that our country’s public policies aimed at [controlling] housing [issues] has failed?

Public Officials Getting a Good Deal

Hu: The recent measures and steps taken have been treating the symptoms but not the root cause. These measures haven’t even started to touch the root of the problem, which lies in the government’s monopoly over the provision of land and high rate of taxes collected. The government collects taxes on about 60% of property. In Shanghai, they collect 64.5%. As such, the government’s profit needs to be controlled [….]

Getting back to the original topic, the favoritism showed to public officials in regards to purchasing low-cost housing belongs to a discriminatory system with Chinese characteristics. People with special power enjoy the benefits of protected housing. Ordinary city dwellers can only buy commercial housing, and country peasants rely on themselves to build housing. This is an issue we must breakthrough.

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0 thoughts on “Government Officials Buy Housing at 4% of Market Value”

  1. “People with special power enjoy the benefits of protected housing. Ordinary city dwellers can only buy commercial housing, and country peasants rely on themselves to build housing. This is an issue we must breakthrough.

    GOOD LUCK.

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  2. Hm… may also explain some of the reasons why ordinary folks are getting bulldozed out of their houses in the middle of night – the local party official is eyeing a sweet deal with the developers for a couple of lots to have for themselves.

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  3. I’ve always wondered if there really were that many rich people who could buy the neat (on the outside) condos you could see all over the country. Maybe, after all, it’s mostly government-supplied.

    Could it mean that, in a way, government-supplied housing has been a major source of wealth for China’s real estate billionaires? And am I reasonable in assuming that since a key buyer of real estate seems to be the government, prices may collapse if it pulls out too quickly of this market? If I am not too wrong so far, unfairness just has to keep going.

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  4. I paid an arm and a leg for my shitz in Rural Beijing and its built like shit but it looks good on the outside, and the floor plan is to die for. But I can’t hate on Gov officials for such benefits. Essentially they would be paying themselves back if they paid market prices. They are the Gov right? They are the people who manage the land of China in order for average citizens to thrive in a somewhat harmonious environment. Citizen should be so lucky to have have such housing available because of these guys. If anything market prices are too inflated but that is to counter act the flood of bulk and unworthy buyers. Im sure there are more super rich than there are Gov officials so the ratio is fair to say in my eyes.

    I know if I was an official I would want all the benefits I can get to keep me from just saying “fuck it every man for themselves”.If anything the benefits keeps them more honest. Makes them wanna keep their job and do their job competently. Take these fringes away and watch a whole new era angry, bitter, tight wadded officials not giving a damn about prosperous China moving forward.

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  5. Custer I don’t see it as real corruption. Its almost like Gov. discounts. Like when I was in the Navy, Some military bases are like their own city. You never have to leave them to get what you want. Most of everything is discounted way more than what it is to gen pop markets. Or lets take my GI bill, same for buying land or a house, my college education paid for or supplemented by tax payers. Why should public servants have to pay the same as private citizens? Its not worth serving if the benefits are not worth all the risk. Another example is in the US where high ranking Gov bodies get way better medical, and perks than the average citizens.

    Im not saying there isn’t any corruption going on, but corruption is driven by the greedy and abusers of power.I don’t see anything wrong if its some type of policy that grants these officials that type of power. Maybe I need to read to the article to get a better understanding.

    Again if I was a high profile official with my fingers in allot of special interests matters, damn right better have some special treatment and favoritism. It would behoove me to make sure my life is in order so that I can facilitate quality life for my fellow citizens. These officials are not needlessly keeping the public from doing what they want to do sort of speak but receiving the life most people have to work hard to get.

    I kind of agree with the practices but not the dept of it. Their discounts should not be that high, but none the less its great. Its not like they are getting the houses for free they still pay money. One way of looking at it is even if they paid full price they will get their money back any how. Gov officials are not average citizens by trade. Tax payers pay their salary, tax payers money built those houses yet tax payers still have to buy the houses. That seems to be the system that is working for the time being, but China is very progressive and they make turns that’s not always well advised but it’s somewhat effective and efficient.

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  6. When you were in the military, how often did you get a 96% discount? Also, what risk is there from being a public official in China? The “risk” of tripping over someone bowing and scraping in front of you, as in Liaoning? The “risk” you might catch a disease from one of the many prostitutes you visit? The “risk” of having to spend some of your hard-earned graft money to keep from letting your accounts appear too big?

    This system does exist, but I would say it “is working” to an extremely limited extent. Corruption is the main complaint among Chinese people, and far and away the leading cause of social instability.

    I completely disagree that public officials should get extra benefits. Why should they? Because they serve the public? All jobs (well, nearly all) serve the public good, in a way. Without farmers, there’s no food, without teachers, no one can read, without shopkeepers no one can find what they want easily or affordably, etc. Gov’t officials have salaries, same as everyone else, and by and large their jobs have very few “risks” at all.

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  7. Custer I don’t have any disagreements with all of that. I totally agree that the discounts are too large. I know corruption is huge here. I can’t imagine it being 100% or even 50% corrupt. Still it is pretty corrupt when its shouldn’t be.

    But I still stand on the fact that “do gooding” Gov. officials in China’s system should always get some fringe benifits beyond the average citizen. Even in a corruptless environment I still stand by that notion.

    Forgive me for trying to play both sides here. Its like prostitution in Singapore we all know its bad but some bad things are a necessary evil long as it stays in control. Hope that made any sense. If the system is allowing them to do it then its not corruption until declared so. Getting substantial discounts on high cost housing in high profile cities for high profile Officials really does not sound like corruption but a secret perk that really no one out side of that circle is supposed know about.

    Again this is the system that in place, and the Gov. has to really want to change it for it to actually be a problem to correct. I don’t like it either but give it some time something is bound to happen.

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  8. But Custer, government officials do have to spent lots of money on their second, third, and fourth wives!

    How about trying this on for size, B-real?

    “Key Findings:

    • Though the Chinese government has more than 1,200 laws, rules, and directives against corruption, implementation is spotty and ineffective. The odds of a corrupt official going to jail are less than three percent, making corruption a high-return, low-risk activity. Even low-level officials have the opportunity to amass an illicit fortune of tens of millions of yuan.

    • The amount of money stolen through corruption scandals has risen exponentially since the 1980s. Corruption in China is concentrated in sectors with extensive state involvement, such as infrastructure projects, real estate, government procurement, and financial services. The absence of competitive political process and free press make these high-risk sectors susceptible to fraud, theft, kickbacks, and bribery. The direct costs of corruption could be as much as $86 billion each year.

    • The indirect costs of corruption (efficiency losses; waste; and damage to the environment, public health, education, credibility and morale) are incalculable. Corruption both undermines social stability (sparking tens of thousands of protests each year), and contributes to China’s environmental degradation, deterioration of social services, and the rising cost of health care, housing, and education.

    • China’s corruption also harms Western economic interests, particularly foreign investors who risk environmental, human rights, and financial liabilities, and must compete against rivals who engage in illegal practices to win business in China.

    • The U.S. government should devote resources to tracking reported cases of corruption in China, increase legal cooperation with China (to prevent illegal immigration by corrupt officials and money laundering), and insist on reforms to China’s law-enforcement practices and legal procedures before tracking Chinese fugitives in the United States and recovering assets they have looted.”

    (Source: http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=19628 )

    I’m not so sure how it can be argued that government corruption helps anyone at all except for the individual committing the theft. But I have to say, that’s some pretty bold logic you’ve got going there! Especially in this bit:

    “If anything the benefits keeps them more honest.”

    That’s right. Corruption breeds probity. I’m pretty sure if Zhu Rongji saw you writing this, he’d demand your head on a plate.

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  9. B-real,

    For someone who apparently lives in rural Beijing, I’m quite surprised about some of the opinions you hold. I think you should take a moment to ask a close and personal Chinese friend if they think corruption is an endemic problem and I can almost guarantee they will tell you yes, absolutely.

    I’ve honestly never met a single person in the 2 and a half years I’ve lived here who didn’t state without hesitation that they believe that fully 100% of Chinese officials are corrupt. So deep is this belief that many even tell me that if you’re a Chinese cadre and you try to NOT be corrupt, you’ll inevitably be forced out of your position by those who are.

    I quoted Zhu Rongji before. He was famous for saying during his vice presidential term that he demands 100 coffins for Chinese officials — 99 for the corrupt and 1 for himself.

    Then there’s the “Great Green Wall” which was supposed to beat back the advance of the Gobi desert but which has been largely ineffective due to insufficient funds as a result of theft.

    Then there’s one of the more obvious results of corruption where, despite the endless stream of wealth in cities like Shenzhen, there are still many, many villages are still without paved roads and running water and some without even electricity.

    I could honestly continue writing about this for hours, but I just don’t want to because I know that China is so entrenched with corruption that it’s simply not worth the time.

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  10. Well I can see you are passionate about this. But as long as you can keep writing about it I can keep disagreeing about the debt of corruption. Everybody knows the system is fucked but the locals even I have made the best of what I can get out of the situation at hand. I don’t believe China of today would be where it is as it stands today running fully corrupt. It doesn’t make any sense. Im not going to force my opinion on you. All I have to say is give it time. When I opened my factory in an area I not supposed to operate that was because of “Guanxi”. The last 2 years have been rocky because official have been switch somewhere in the grape vines and they can longer allow me to operate in this area according to 30 year old laws. With all the Chinese partners, with all the Official connections I have 6 weeks to move my shop out of this area or face being blacklisted. I was a benefactor of corruption and loved it but I get audited, inspected, capped and monitored on a regular bases and its putting strains on my operations.

    The system as a whole is still progressing. They have to work out some of the kinks that can hinder their progress. Its not perfect, it will never be truly perfect but it is what it is.

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  11. B-Real,

    A. Your English is surprisingly good for a 五毛…
    B. Trolling gives you kicks.
    C. You’re just ignorant and completely out of touch with reality and therefore incapable of reasoning.

    The CPC will either tackle corruption or go down with it when the masses have had enough of it and go postal on officials.

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  12. While it is true that the government (theoretically) works for the benefit of a country, the is no reason to reward them for the service they give the country in ways that bias them towards acting against the interests of the country.
    Even if you did consider corruption a fair reward for the good work they do (which is hard to do considering how large the sums involved are) forcing PUBLIC SERVANTS to abuse their positions to get a decent wage degrades morality amongst those in charge and is far less efficient then just giving them larger wages.

    Like

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