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China Gambles on Affordable Housing

Building 36 million units for the poor is meant to save the economy
Bo Xilai pushed social housing in Chongqing
Bo Xilai pushed social housing in ChongqingPhotograph by Nelson Ching/Bloomberg

The Beijing Star Brand Building Materials West Factory has been demolished, and in its place is a construction pit crawling with dump trucks as cranes tower above. This is the future home of the Taiheyuan Affordable Housing Project, which will have grocery stores, restaurants, and 2,400 apartments for factory hands and other low-income residents.

As growth slows and real estate values slump, Chinese officials are counting on cheap housing to help prop up the economy. The Taiheyuan project is just a tiny piece of a vast national effort to build subsidized housing for the urban poor. Five million affordable apartments are to be built this year, with a goal of reaching 36 million units by the end of 2015. “We will work speedily to improve the system for constructing, allocating, [and] managing … low–income housing,” Premier Wen Jiabao said in a speech on March 5. Leaders in Beijing, though, may encounter stiff opposition at the local level as cities and towns balk at footing the bill and seek more profitable investments for their money.