Peak and ebb of shed reform: turning point of monetized resettlement policy

 Peak and ebb of shed reform: turning point of monetized resettlement policy

On July 24, workers at a shantytown reconstruction construction site in Zunhua City, Hebei Province. Xinhua News Agency

Extension of shed and speed up

Since 2005, shantytowns have been transformed in Liaoning Province. At that time, the funds for the shed reform were all provided by the local government, and another part was borne by the social funds. At the beginning, it is basically physical placement, and the cost is very high.

However, the shed reform in this period was still limited in a few areas, and the progress was slow.

Under the background of the international financial crisis in 2008, China began to transform all kinds of shantytowns as an important part of the affordable housing project in cities and towns, and promoted the transformation of various types of shantytowns in cities, state-owned industrial and mining areas, state-owned forest areas (forest farms), state-owned reclamation areas (farms) and so on. Shantytowns began to become the main type of affordable housing construction in China, low rent housing and affordable housing gradually withdrew.

The extension of shed is directly reflected in the data. In 2008, shantytowns were transformed nationwide. By 2012, 12.6 million shantytowns had been transformed. Since then, 3.5 million units were started in 2013 and 4.7 million sets in 2014. From 2015 to 2018, the number of shed renovation projects in China has been maintained at more than 6 million units, until 3.16 million units in 2019.

During the five years of the 13th five year plan, the target task of shantytowns reform is 20 million; from 2016 to August 2020, more than 23 million shantytowns of various types were started to be transformed, exceeding the target task.

According to the statistics released by the first finance and economics reporter, the total investment of the national shed reform in the four years from 2016 to 2019 is about 6.26 trillion yuan.

The speed-up and expansion of shed reform is inseparable from the monetization policy of shed reform started in 2015. The so-called monetized resettlement of shed reform means that the government directly compensates the residents in the shantytowns to be demolished in the form of money, and then the residents go to the commercial housing market to buy houses.

Chen Zhenggao, former Minister of the Ministry of housing and urban rural development, has publicly said that monetization of shed reform first improves efficiency. After moving out of shantytowns, people can live in buildings, and it will take at least three or even four years to build houses. Second, they can choose freely, including location and floor selection, new house and old house selection, property selection, etc.

In addition, from 2015 to 2018, the monetization of shed reform also played a great role in resolving the inventory of the third and fourth tier cities. In cities where housing prices have risen rapidly, housing supply has been increased by replacing new sheds with new ones; cities with more real estate inventory have been resettled through shed reform to promote the de stocking of real estate.

Since 2017, the housing and construction department has no longer released the national monetized resettlement ratio of shed reform. According to the industrys estimation, about 60% in 2017 will help digest the stock of the property market from 250 million to 300 million square meters.

Two sides of monetization policy of shed reform

In 2018, with the rapid digestion of local property market inventory, the two sides of the monetization policy of shed reform began to highlight. Although it helps to quickly solve the housing problems of the families who have been transformed into greenhouses and digest the inventory of the local property market, this policy also rapidly enlarges the demand for housing in these areas, and objectively promotes the rise of house prices in the third and fourth tier cities.

On October 8, 2018, Premier Li Keqiang presided over the executive meeting of the State Council to deploy and promote the transformation of shantytowns, and required to adjust and improve the monetized resettlement policy for shantytowns reform according to local conditions. Cities and counties with insufficient inventory of commercial housing and high pressure of house price rise should cancel the preferential policy of monetized resettlement as soon as possible.

In response to this policy change, Ni Hong, Vice Minister of the Ministry of housing and urban rural development in 2018, said that the preferential policies for cities with relatively small inventory and high pressure of house price rise are adjusted to accurately implement policies and implement policies according to the housing development status and level of different cities. This is not to cancel the monetized resettlement, but to adjust the incentive policy of monetized resettlement according to local conditions.

In addition, the central level is also gradually reducing the scale of shed reform. In 2018, 6.26 million sets of shantytowns were started, with an investment of 1.74 trillion yuan; by 2019, the number of shantytowns in China was reduced to 3.16 million units, with an investment of 1.2 trillion yuan.

During the national two sessions in 2020, Lu Tianxi, director of the Department of housing and urban rural development of Jiangxi Province, said in an interview with China Construction daily that since 2019, the state has gradually tightened the policy of shantytowns transformation, and the central subsidy funds have been greatly reduced. At the beginning of 2020, the Ministry of Finance issued a notice to adjust the central financial subsidy budget for affordable housing projects in cities and towns in 2019 from 50 billion yuan to 20 billion yuan. Among them, the subsidy funds of Jiangxi Province decreased by 2.03 billion yuan, nearly 56%.

Jiangxi Province is one of the large-scale shantytowns in the past two years: 293000 sets of shantytowns will be started in 2019, ranking the first in China; 204200 sets of shanty towns will be transformed in 2020, which will continue to be the first in China.

Lu Tianxi believes that in order to promote the transformation of shantytowns, we should first maintain the stability of the central financial support policy. He suggested that we should continue to steadily promote the transformation of shantytowns as a livelihood project, and continue the practice over the years, without reducing the subsidy level of the central finance to the shantytowns transformation funds.