Rents Are Low but Apartments at Premium as China Struggles to Allocate Housing

Zhou Lihong, seven months pregnant, has no home of her own and shares a tiny room in a company dormitory with two other women. Her husband, who works for the same firm, lives upstairs.

The company offered part of an old house that had no gas, heat or plumbing, but the young couple rejected it, gambling that a better offer would come. They have no guarantees.

While the Zhous wait and hope, suitable apartments are empty.

One is in the name of Yan Fields, a Chinese woman who followed her American husband to the United States four years ago, and rents for the equivalent of just $1 a month.

It is too valuable to give up, and her parents don’t want to sublet for fear of attracting attention that might cause them to lose the apartment.

Housing problems are most acute in the major cities. Officials said one-fourth of Beijing’s more than 9 million residents lack adequate accommodations.

An apartment shortage is not the entire problem. The system of housing distribution, through employers, lends itself to inequities and abuse. And government programs have had limited success in improving the situation.

In 1988, a few cities began raising rents and selling apartments to tenants to finance construction of more housing, but the reforms have not been applied nationwide. Many local officials blocked them, unwilling to pay the higher rents or lose the power they get from assigning scarce apartments.

Housing officials insist that the reforms have not been abandoned. They say 30 counties and 19 cities, including parts of Beijing, Shanghai and Canton, are following the new policies on a limited scale.

Nearly all Chinese have roofs over their heads, but they share them with many more people than Americans do.

The average living area for a Chinese is 81 square feet, according to government figures. In the United States, says the National Assn. of Homebuilders, the average person has 755 square feet.

A Shanghai newspaper wrote about a couple who lived in a single room with an aging father. After four years of marriage they remained childless, and the husband was convinced that lack of privacy was the reason. They borrowed an apartment for five months, and the wife became pregnant.

Employers determine whether a young couple get their own apartment. Companies distribute housing by seniority, and both husband and wife have a chance to be assigned an apartment by their respective employers.

Workers who have connections to the company housing official may get larger apartments than they need. Rents are so low there is no reason not to obtain as much space as possible.

Rents for an average three-room apartment in Beijing range from the equivalent of 34 cents a month to $1.14.

Officials say that, on average, Chinese spend less than 1% of their incomes on housing, contrasted with 15% in the United States. In the late 1950s, Chinese spent 6% to 10% of income on rent, and officials want to return to that level by the end of this decade.

“Rent is so low that it takes years to recover” a new building’s cost, said Zhang Yuanduan, director of the Construction Ministry’s real estate department.

Most new buildings soon begin deteriorating because rent often does not even pay the cost of maintenance. And Chinese are being born at the rate of more than 30 a minute, too fast for new construction to keep pace.

In outlying parts of Beijing and at some companies where the housing reforms are being introduced, rents have risen to the equivalent of $6.30 a month for a three-room apartment.

The city built 314 new apartments and offered them for sale at prices much closer to the real cost--an average of $18,250, or 40 times the average annual wage--said Liu Qi, deputy director of Beijing’s Housing Reform Office.

Buyers snapped up the apartments, borrowing money from relatives abroad or taking out bank loans.

Liu said some companies in Beijing were following suit and had sold nearly 4,000 apartments to workers in the last two years, generally at prices lower than those offered by the city. Proceeds are used to renovate old housing and build new apartments.

A local government in Liaoning, a northeastern province, earned enough from selling apartments and raising rents to build 120 new dormitories in less than three years. In the past, it had been able to build only one or two in the same period, said Zhang of the Construction Ministry.