Wu Guangqiang

    jw368@163.com

    WHILE other major Chinese cities are torn between tolerating the property bubble in order to maintain false prosperity and deflating the bubble at the expense of huge revenues, one mega city is free from such anxieties. That city is Chongqing.

    With a population over 30 million people, Chongqing is a rising star in economic and social development.

    Amid the national economic slowdown, Chongqing has maintained a double-digit growth rate in its GDP for over 10 years and topped the national growth-rate ranking chart for 10 consecutive quarters, or 30 months.

    Unlike other cities where rapid economic growth is invariably accompanied by skyrocketing housing prices, Chongqing’s home prices have been basically stable. When the average housing prices in Beijing, Shanghai and Shenzhen were breaking record after record, with the highest hitting 100,000 yuan (US$14,780) per square meter, Chongqing’s average price for this past September was only 7,164 yuan, merely a fraction of the former.

    Needless to say, Chongqing’s low and stable housing prices please everyone living in the city except real estate developers, who could have made more profits elsewhere.

    What secret does Chongqing have to stay immune to such symptoms of urban disease plaguing other cities? When every pundit is blaming such fundamental causes for the forming of the property bubble as excessive mobility, over-issuing of currency and over-reliance on land revenues, why does Chongqing seem to be the only exception?

    Chongqing government’s ace is its powerful and effective ability to manage and regulate the market. Chongqing is an excellent example of promoting healthy and balanced economic and social development by combining government management with market force.

    More specifically, three measures are at work: large quantities of land reserves and supply, real estate taxes and low-rental public housing.

    According to the statistics by the Chinese Index Research Institute, over the period of 2003-2014, Chongqing registered land deals amounted to a total acreage of 700 square kilometers, while the city’s acreage for construction increased by 693 square kilometers, so land supply basically kept in pace with city expansion, effectively avoiding the imbalance of land supply and demand.

    Unlike other cities where most land is bought by developers, who compete to push up prices, the Chongqing government has a firm grip on land reserves and supply through eight State-run companies. These companies are responsible for land leveling and other infrastructural construction before returning the land back to the government, which sells it to developers. This way, land supply is abundant and land prices are kept stable.

    Chongqing’s “land ticket” system is another reason for their success. Put simply, the system involves trading rural land by public auction. But every inch of rural land is traded without decreasing farming land, as it is required that the equivalent area of idle land is made arable before a new lot can be purchased for urban development.

    This innovative scheme perfectly tackles the dilemma of increasing demands for land for urban expansion, which often lead to sharp drops in the amount of arable land. And more importantly, the abundant land reserves successfully keep speculation in check.

    In addition, adequate supply of public rental housing plays a key role in stabilizing market prices. Currently, over 600,000 migrant workers and university graduates are living in public rental homes.

    Chongqing’s success demonstrates that an active role of a government is indispensable in economic activities. As Chongqing government puts it, the government respects the market, but never shrinks away when it is needed.

    Chongqing’s experience also shows that a stable and reasonable property market doesn’t necessarily mean an economic slowdown and a loss of financial revenues.

    (The author is an English tutor and freelance writer.)