China Raising Housing Prices the Next 3 Years : Real estate: The object is to generate money to fix up the many substandard accommodations.

Few people would complain about a rise of $1 in their monthly rent.

But for residents of China’s capital, long used to paying pennies, housing reform is the first real crack in the iron rice bowl--a socialist cradle-to-grave welfare system that takes care of the people at the expense of state finances.

Communist Party leaders want to get their hands on some of the billions of dollars Chinese have in the bank to fix up the crowded, crumbling, smelly and cramped apartments that house urban residents.

Because those leaders are fearful both of abandoning socialism to pure market forces and unleashing popular unrest with huge price rises, housing reform will be a slow, complex process.

After the army crushed pro-democracy unrest in 1989, housing reform efforts ground to a halt, only to be cautiously revived last year.

Beijing’s elderly leaders now have one wary eye on shoppers in Moscow, who are furious because their socialist safety net was torn away at one blow. The Chinese brass want to ensure housing reform does not drastically hurt living standards.

“Reforming something only halfway is very difficult and can’t achieve very much,” one Western diplomat said.

“The problem with many of China’s reforms is that (Communist Party leaders) feel they cannot go far enough.”

Many Beijing residents say the reforms will not really change their lives.

“My work unit has a lot of money,” said a young government employee who lives with his wife in a one-room, fifth-floor walk-up. “I’m sure the government will take care of it.”

He paid less than 4 yuan (74 cents) per month last year in rent. That will double this year and jump again each year until he pays 20 yuan ($3.70) in 1994.

The couple take home 320 yuan ($60) per month, making rent, even after reform, the least of their worries.

Housing reform administrators must battle everyone from senior officials who have used their position to obtain huge apartments to retirees who fear that an end to the welfare state will bankrupt them.

They are quick to say that China has not abandoned socialism.

“Housing reform does not contradict socialism,” said Li Jianhua, a deputy department head at the Beijing Housing Reform office.

“With our huge population, our nation doesn’t have the resources to give a house to everyone anymore,” Li said.

Official reports show that a third of China’s people have inadequate housing. With new children swelling the 1.1-billion population daily, the state--facing a huge budget deficit caused by massive subsidies--is running out of options.

“Now people only think of buying color televisions or videotape players instead of paying the rent,” Li said.

“I’m not saying this is bad, but your home has to be an important part of your spending.”

Different cities in China have different housing reform plans, rules, policies, loopholes and rent standards.

Even within a city, there are many ways of implementing or obstructing the reform.

Beijing, for example, must battle powerful central government ministries and organizations that are unwilling to bow to a mere municipal directive.

“It’s not like selling groceries, where you can change prices overnight,” Li said. “There’s a process. You do it step by step.”

The slowness of the process means that the government will continue to lose huge sums of money despite the reforms.

The rest of the costly iron rice bowl--such as free medical care, child care, subsidized food and lifetime employment--will stay intact for some time.

The Beijing plan will raise rents each year, until by 1994 most residents will pay five times what they pay now.

That 0.55 yuan (10 cents) per square yard a month represents only what it cost the government to do basic house maintenance in 1987.

The more ambitious side of housing reform, offering homes for sale, is weighed down by bureaucracy and rules that make it a far cry from the rough-and-tumble capitalist market.

Beijing is allowing residents to buy some houses at a price equal to about three years’ salary for a worker. The buyer must live in the house for five years before selling.

The worker’s company gets first right of refusal to buy the house back at a state-set price. Any money the worker makes on the sale over a government-set standard goes straight into state coffers and not the individual’s bank account.

“I’d like to buy a nice place,” said one man who lives with his wife in one room without a private toilet or kitchen. “But not something like I have now.”