Housing Inequality in Transitional Beijing

ijur_890 936..956 The market transition in China has resulted in significant social inequality, including housing inequality, in a formerly egalitarian society. This article provides both a conceptual framework and an empirical analysis of housing inequality in transitional urban China. Using the 1995 1% Population Survey and the 2000 Census data for Beijing, it shows that there was significant housing inequality between different socio-economic and institutional groups, and that the reforms in the late 1990s aggravated it. While emerging market mechanisms began to contribute to housing inequality, socialist institutions such as the household registration (hukou) system continued to be significant in the late 1990s, although there is evidence of the declining importance of other institutional factors such as political status. This study contributes to the market transition debate by arguing that different elements of the socialist institutions follow different paths in the reform and thus have different impacts on social inequality. Introduction There is increasing social inequality in former socialist countries that are experiencing market transition, and China is no exception (Szelenyi, 1987; Rona-Tas, 1994; Bian and Logan, 1996; World Bank, 1997). Given the physical form it takes, housing inequality is one of the most significant and visible aspects of social inequality. Wealthy ‘gated communities’ with multi-million dollar villas and dilapidated ‘migrant enclaves’ with crowded shacks are now emerging side by side in Chinese cities (Huang, 2005). Despite significant housing inequality in Chinese cities, however, the existing literature on the impact of market transition has focused mainly on income inequality, and we know relatively little about housing inequality. There are two possible reasons: first, housing reform in Chinese cities was launched ten years later than economic reforms (1988) and significant changes did not happen until the late 1990s; second, there has been little systematic data on housing available to the public. While a few recent studies using survey data and aggregated census data have shed some light on housing inequality in China (Logan et al., 1999; Wu F., 2002; Huang, 2005), much is still unknown due to the complexity and the changing nature of the housing system. This article aims to understand the patterns and dynamics of housing inequality in urban China by focusing on Beijing. In socialist China, urban housing was considered a welfare benefit provided by employers (or ‘work units’) and local governments (through municipal housing bureaus). The allocation of public housing was based on a set of non-monetary factors, such as job rank, job seniority, marital status and household size, and public rental was the dominant tenure (Bian et al., 1997; Wang and Murie, 2000; Huang and Clark, 2002). While there were evidences of housing inequality (Logan et al., 1999), the overall level of housing We sincerely thank David Miao Chunyu for his data analysis, and the IJURR reviewers for their helpful comments and suggestions. Volume 33.4 December 2009 936–56 International Journal of Urban and Regional Research DOI:10.1111/j.1468-2427.2009.00890.x © 2009 The Authors. Journal Compilation © 2009 Joint Editors and Blackwell Publishing Ltd. Published by Blackwell Publishing. 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St, Malden, MA 02148, USA consumption was very low (Huang, 2003a) and housing inequality was relatively small. Aiming to introduce market mechanisms into the housing system, urban housing reform was launched nationwide in 1988, and it has created fundamental changes in the provision and consumption of housing in Chinese cities (see Wang and Murie, 1999; Huang and Clark, 2002 for more details). First, former public housing is being privatized through subsidized sale. According to China’s 2000 Census, about 30% of urban households purchased previously public housing, while only 16% still rented public housing. Secondly, new private housing — ‘commodity housing’ (shang ping fang) built by developers and ‘self-built housing’ (zi jian fang) erected by individual households have become important housing options since the mid-1990s. In 2000, 16% of urban households purchased commodity housing and 7% rented it, while 27% lived in self-built housing. Chinese urban households have been, for the first time in decades, given the freedom to choose their preferred dwellings, tenure and neighborhoods. Thus a social and spatial sorting of households and neighborhoods is taking place in Chinese cities (Huang, 2005; Huang and Deng, 2006; Li and Huang, 2006). A relatively homogeneous society is evolving into one with significant housing inequality and residential segregation. However, as markets begin to function well, socialist institutions continue to play significant roles in housing consumption (Li, 2000a; Huang and Clark 2002; Huang, 2003b). Thus, the dynamics of housing inequality in Chinese cities are rather complex and deserve scrutiny. In the following sections, we will develop a conceptual framework to understand housing inequality in transitional Chinese cities and the relevant hypotheses. Then we will study housing inequality in Beijing using the 1995 China 1% Population Survey and the latest 2000 Census data. We end with conclusions and discussions. A conceptual framework and hypotheses Housing inequality is one of the central topics in social sciences. In the United States, where private housing dominates the stock, housing inequality is prevalent, resulting from a set of factors ranging from socio-economic status to racial discrimination (Burgess, 1967; Clark, 1986; Galster, 1988; Massey and Denton, 1993). In welfare state nations such as the Scandinavian countries and Britain, a large share of public (social) housing is or was available, especially after the second world war, and housing inequality is less significant. Yet, with the withdrawal of the welfare state and the ongoing privatization process such as the ‘Right to Buy’ program in Britain, housing inequality is increasing and a ‘residualization’ process is taking place in the public sector as only the older and the less well-off population are left in social housing (Burrows, 1999; Forrest and Murie, 1999). Despite the dominance of public housing in socialist economies, housing inequality was prevalent, with those who possessed political power consuming larger and better housing (Szelenyi, 1978; 1983; Logan et al., 1999).Yet it is problematic to apply theories based on studies in either market or socialist economies directly to housing consumption in Chinese cities where the socialist housing system is being transformed by market reforms. Nee’s market transition hypothesis (1989; 1991; 1996) states that markets will gradually replace administrative fiat and political power as drivers of social mobility and inequality, and markets tend to reduce inequality. While this is supported by several studies on income inequality in China and Hungary (Szelenyi, 1978; Nee, 1989; Walder, 1995), scholars have observed that the power associated with political elites has persisted and inequality has increased during the market transition (Szelenyi, 1987; Bian and Logan, 1996). Rona-Tas (1994) offers a ‘power conversion’ thesis because he finds ex-communist cadres in urban Hungary are able to convert political power to economic benefits and maintain their advantages. In contrast, Bian and Logan (1996) argue that political privilege is deeply embedded in economic situations, and market coordination does not supplant bureaucratic Housing inequality in transitional Beijing 937 International Journal of Urban and Regional Research 33.4 © 2009 The Authors. Journal Compilation © 2009 Joint Editors and Blackwell Publishing Ltd. coordination but is grafted onto it — the ‘power persistence’ thesis.Yet this heated debate on the market transition hypothesis has focused mainly on income inequality. With the uniqueness of the housing system in China, we argue that the dynamics of housing inequality are closely related to, but different from, income inequality, and thus a different framework is needed. Because of the transitional nature of the housing system, both socialist institutions and market mechanisms contribute to housing inequality in Chinese cities. While housing reform has not completely eliminated the roles of socialist institutions in housing consumption, it has generated new dimensions of housing inequality (see Figure 1). First, despite the reform, socialist institutions such as the Household Registration (hukou) System, work units and housing bureaus are still functioning in the housing system. The hukou system is one of the most important institutions in China in that it defines a person’s access to welfare benefits, including housing (Chan 1994; Cheng and Selden, 1994). It divides the urban population into four groups: local residents with non-agricultural hukou (local urban residents), local residents with agricultural hukou (suburban farmers), migrants with non-agricultural hukou registered elsewhere (urban migrants), and migrants with agricultural hukou registered elsewhere (rural migrants). Only residents with local non-agricultural hukou qualify for long-term subsidized public housing. In spite of ongoing reforms in the hukou system, migrants still face institutionalized discrimination in accessing public housing. They are also not allowed to access some commodity housing, especially that with subsidies such as ‘economical housing’ (jingji shiyong fang). Without housing subsidies, migrants often live in extremely poor housing to save on rent. While some are wealthy enough to purchase or rent private housing, most migrants live on construction sites, in trading markets, factory dorms or individual homes, particularly the homes of suburban farmers (Ma and Xiang, 1998; Solinger, 1999). Local residents with agricultural hukou do not qualify for public housing either, but they are allowed to build their own houses on collectively owned land. Thus, they may occupy relatively larger units than urban residents, but they usually live Socialist Institutions Market Mechanisms Hukou system Mechanisms