Beijing - AFP
With their monthly income of 10,000 yuan (about $1,500), Beijing nurse Liang Huiqing and her husband would not have been able to get a foothold in China\'s soaring property market without government help. The couple, who have a 12-year-old son, bought their apartment in China\'s vast capital for just 500,000 yuan -- about one-sixth of the market price -- under a state-subsidised housing programme. Anxious about the country\'s growing wealth gap, China\'s communist government is investing more than $700 billion in low-cost housing to help those priced out of the property market or struggling to meet fast-rising rents. Over the next five years, it plans to build or renovate 36 million homes country-wide amid concern that growing public discontent over high prices could spill over into social unrest -- and threaten the Communist Party\'s hold on power. \"Beijing\'s property prices are expensive. Many people can\'t afford to buy a house, especially the young people,\" said Liang. China\'s public housing has been neglected for years as local governments, eager to cash in on scorching property prices, sold land to developers for more lucrative projects. There are plans to start work on 10 million apartments this year under the scheme which allowed Liang and her family to move out of the cramped apartment they shared with her parents and into a place they can call their own. But local authorities are dragging their feet due to a lack of funding, while developers are put off by low profit margins. The plan is expected to be largely financed by banks and requires local authorities to provide valuable land for free or at cheap prices -- adding to the pressure on already stretched local government finances. Analysts say the programme could cost local administrations as much as 500 billion yuan a year in lost land sales and push them deeper into the red as they borrow money to finance construction. \"Already indebted local governments, and eventually the banks, will ultimately bear much of the initiative\'s financial burden,\" said Nicholas Consonery, a Washington-based analyst at consultancy Eurasia Group. \"This will further strain local government budgets, reducing the resources available for social welfare spending.\" China\'s National Audit Office said last month the debt held by local governments stood at 10.7 trillion yuan as of the end of 2010 -- equivalent to about 27 percent of China\'s 2010 gross domestic product. Unperturbed, in June, China\'s housing ministry issued an urgent call to start building, calling it a \"political mission\" -- an order IHS Global Insight analyst Ren Xianfang said local officials would have to comply with. \"This is basically a political goal which, if they miss, could affect their political fortunes,\" she told AFP. Property developers are also baulking at the low or non-existent profit margins from social housing. But analysts say local officials, worried about their future promotion prospects if their state-subsidised housing projects stall, have sought to persuade developers by making it a condition for winning other land at auction. Standard Chartered economist Stephen Green said the government\'s message for developers was clear: \"You\'ve made your money, now it is time to serve the country.\" The public projects are likely to end up largely on the outskirts of cities, given that land there is less valuable. The recently completed social housing complex where Liang now lives with her husband and son is a forest of high-rise apartment buildings about an hour\'s drive from the centre of Beijing. It is one of the biggest such developments in the capital, but for resident Yang Mei, 27, the location is inconvenient. Her husband spends two hours a day driving to and from work and she is stuck at home with their five-month-old son due to the lack of public transport in the area. \"We can\'t afford a house, we don\'t have the money, we don\'t even have enough money to raise the child,\" Yang said. \"I expect it will be better once the subway opens.\"