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Housing Inequality in Urban China: Guangzhou 1996 and 2005

By

Si-ming Li

Department of Geography

And

Centre for China Urban and Regional Studies

Hong Kong Baptist University

October 2009

Acknowledgements: The author would like to thank Miss Becky Pang who assisted in

data analysis. This research is funded in part by Hong Kong Research Grants Council,

Grant No. HKBU242907.


Abstract

Based on household surveys conducted in the City of Guangzhou in 1996 and 2005, this

paper examines the changes in the extent and nature of urban housing inequality upon the

cessation of the welfare allocation of housing in the southern gateway to China. The

result shows that the overall level of housing inequality has remained quite stable. Both

continuities and changes are revealed for the factors behind the differences in housing

consumption. In particular, household income has assumed much greater importance.

However, variables characterizing social and housing stratification in the former socialist

planned economy, such as membership in the CCP and hukou status, continue to affect

access to housing resource.

Keywords: Housing inequality, Guangzhou, welfare allocation of housing, determinants

of housing consumption

Introduction

China is undergoing unprecedented urban transformation. Official statistics put

the total urban population at the end of 2006 at 577.06 million and an urbanization rate of

43.9 percent. The corresponding figures for 1980, when the reform was about to begin,

were 191.40 million and 19.39 percent. In other words, some 386 million people were

added to China’s urban areas over a period of 26 years. While the early reform years saw

the revival of market towns and rapid growth of small cities in association with rapid

development of rural or township and village enterprises, in more recent times especially

since the mid 1990s growth has been concentrated in the country’s largest metropolitan

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centres (Li, 2008; Gu et al, 2008). Between 2000 and 2004, the average population

growth rate of super-large cities (cities with non-agricultural population1 exceeding 2

million) reached 10.77 percent per annum. On the other hand, the population of small

cities (cities with non-agricultural population less than 200,000) actually decreased by an

average of 2.59 percent (Li, 2008, p. 362).

Yet, despite the immense population pressure, the housing conditions for the

average urban dweller in China have registered remarkable improvements over the past

two decades. According to the Statistical Yearbook of China, the per capita housing space

consumed in urban areas increased steadily from 3.6m2 in 1978 to 10.0 m2 in 1985, 16.3

m2 in 1995, 20.8 m2 in 2001 and 26.1 m2 in 2005 (Li and Li, 2008, p. 384). Admittedly

the official statistics refer to the situation of people with the proper hukou, and it is well

documented that migrants’ housing conditions are generally much worse (Wang et al,

forthcoming). Nonetheless, the progress made is still immense. Census data also show

that other aspects of housing conditions such as availability of separate toilet and kitchen

inside the dwelling unit as well as home furnishing also manifest substantial gains.

Moreover, the urban homeownership rate jumped from 24 percent in 1990 to 72 percent

in 2000 and further to 82 percent in 2005 (Li and Li, 2008, p. 386). Underlying the huge

increase in per capita housing space amidst phenomenal population growth are massive

investments in housing construction. The 2000 Population Census shows that 47.6

percent of the urban housing stock was less than 10 years old. In Shanghai, the largest

city of the country, the figure was 51.3 percent (Li and Li, 2008, p. 387). The pace of

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China’s hukou or household registration system comprises a dual classification, firstly the differentiation
the population into agricultural and non-agricultural, and secondly into local and non-local (see, for
example, Chan, 2009). With the massive increase in migration and the encroachment of urban areas into
surrounding farmlands, many holding the agricultural status are no longer peasants. Yet, officially they are
still considered agricultural by virtual of their hukou status.

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housing construction accelerated even further in the new millennium. New housing starts

by real estate developers increased from 188.0 million m2 in 1999 to 551.6 m2 in 2005,

and the total number of commodity housing completions between 1999 and 2005 reached

19.88 million units (Li and Li, 2008, p. 399).

Surely, the improvements are unlikely to be evenly felt among all segments of the

population. Some would have benefited more while others much less. For certain groups

the housing conditions could be even worse than before. While there existed housing and

other inequalities under the former socialist redistributive economy, the nature of housing

inequality in China today is much more complicated, with market forces playing an

increasingly influential role. The gradualist and incremental nature of China’s reform

(Zhu, 1999), particularly the continuing domination of the Chinese Communist Party

(CCP or Party) and the state over economy and society, however, implies that the nature

of housing inequality in China is unlikely to be the same as that in Western countries.

In China under Mao the major social cleavage was the rural-urban divide, which

was underpinned by both the hukou or household registration system and a price system

variously known as scissors’ difference, which favoured urban-industrial goods over

primary commodities (Chan, 1992). Only people with non-agricultural hukou would be

provided with grain rations and assigned to a danwei or work unit (Lu and Perry, 1992).

The latter, which could be a state or Party organ or a state enterprise, was much more

than an employer. It also acted as the single most important institution performing

redistribution functions as well as exercising social and political control. The great

majority of urban dwellers were danwei members, and lived in danwei-provided housing

within the respective danwei compounds.

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While most danwei dwellings were of similar size and quality, the lopsided

emphasis on production over consumption resulted in perennial severe housing shortage

(Chan, 1992). Not every danwei member would be able to secure a danwei flat. Priority

in the allocation of danwei housing was based on job rank, seniority, Party affiliation and

rank in the Party, and recognized contribution to the state. Also, not every danwei was

equally endowed with resources. Enterprises not in industries top on the development

agenda were deprived of resources. Housing conditions in such danwei tended to be

much worse than those that were emphasized. But it was those people without danwei

housing who had to stay in dilapidated housing inherited from pre-1949 times, the great

majority of which came under the control of the municipal housing bureau upon the

socialist transformation of the 1950s, endured the worst housing conditions (Li and Li,

2008; Bian and Logan, 1996).

Accompanying the economic reform was reform in urban housing provision.

Initially the reform focussed on the supply side, with the establishment of real estate

companies to replace individual danwei as the main developers of new housing. Yet most

commodity housing units built by the real estate companies was bought by the danwei for

subsequent allocation as a welfare item to their workers. With the promulgation of the

“Views on Nationwide Implementation of Urban Housing Reform” in 1991 and the

“Decision on Deepening Urban Housing Reform” in 1994, the emphasis of the reform

gradually shifted to the demand side, with homeownership promotion being a major

objective. Danwei were encouraged to sell their housing stock to sitting tenants at highly

discounted price and provide substantial assistance those currently without danwei

housing to purchase in the open market. Housing thus sold is termed reform housing.

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Established criteria such as job rank and seniority in the workplace were important

considerations in prioritizing the sale of reform housing and the price charged (Wang and

Murie, 1999; Li and Li, 2008).

In 1998 the State Council called for the ending of the welfare allocation of

housing. That is to say, danwei would cease to provide subsidized housing to their

workers. From then onwards, most households have to satisfy their housing needs

through buying or renting in the market. Under such circumstances, wealth and income,

which have become increasingly polarized under the reform, are likely to become the

most important determinants of housing consumption. Although municipal governments

have continued and even expanded the “comfortable housing scheme” under which

selected housing development projects would be put on sale to low and middle income

households at prices some 30 percent below prevailing market levels, such housing

remained quite expensive and beyond the reach of the target population. The last two

years of the twentieth century saw workers in state-owned enterprises and state and Party

organizations stampeding to buy reform housing, a phenomenon variously known as

“catching the last train” (Li and Yi, 2007). Of course, there were those retirees and low

income workers, as well as those who were forced to be permanently “off duty” or

xiagang because of plant closures or firm restructuring in conjunction with the enterprise

reform of the mid and late 1990s. Expectedly, these people could not afford to buy even

with the big discounts.

In the early 2000s, one city after another, reform housing was given full property

right and allowed to enter the market. With the huge difference between the market and

subsidized price, this is tantamount to the conferment of windfall profits to the former

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purchasers of reform housing, who are now able to trade their reform housing unit for

spacious commodity housing in a well landscaped and well maintained gated housing

estate. This, together with phenomenal increases in housing price, has many times

magnified wealth inequality in urban China, which now increasingly manifests in terms

of housing tenure and the value of the dwelling the individual owns (Li, 2007). It may be

argued that people who did well in the former socialist planned economy are doing even

much better in the present socialist market economy. Those who were left behind in the

latest round of housing reform have to live with their dilapidating dwellings or wait for

resettlement to remote suburbs upon redevelopment of their existing premises.

The discussion so far has been concerned with people with the proper hukou. The

reform has brought hundreds of millions of migrants from the country’s vast rural

hinterlands to the major metropolitan centres. A two-class society comprising those with

and without the proper hukou today characterizes all major cities in China (Chan, 2009)

The great majority of the migrant population suffer from discrimination in both the job

and housing markets. In particular, subsidized housing is largely out of reach to the

migrant population. And, given the high price, formal market housing is unaffordable to a

large proportion of migrants. Many have to be contented with substandard housing with

dubious legal status in the urban villages on the former urban-rural fringe (Jie and

Taubmann, 2002).

The highly complicated and varied housing consumption scene resulting from the

different phases of economic and housing reform described above points towards not

only heightened housing inequality but also both continuities and changes in the nature of

housing inequality. Based on data derived from household surveys conducted in

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Guangzhou in 1996 and 2005, the present paper attempts to provide quantitative

indicators measuring the extent of such changes. It may be noted that in the earlier survey

year most commodity housing built was first sold to individual danwei, which then rented

or sold the housing to their workers. In the latter year the market dominated both the

supply and demand sides. Thus, comparisons based on the two surveys provide allow us

to gauge the difference in the extent and nature of housing inequality between a system

which is primarily market based and one in which danwei and other socialist

redistributive institutions still dominated the housing provision scene. The following

section details how the two surveys were conducted and discusses the comparability of

the two datasets. The empirical analysis is divided into two parts, first on the overall

pattern of housing inequality in the two survey years, and second on the changes in the

nature of housing inequality between the two years.

Data

Both the 1996 and 2005 Guangzhou surveys were conducted through household

interviews with the assistance of the Centre of Urban and Regional Studies at Sun Yat-sen

University, which had substantial experience in doing household interviews and

established connections with government departments at the municipal, district and

street-committee levels of the city. Such connections were essential for obtaining the

requisite data for the construction of a reliable sampling frame as well as for obtaining

the permission to undertake the household interviews.

Strictly speaking, the two surveys were targeting at two different types of housing

and hence populations. More specifically, the 1996 survey only covered newly

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constructed commodity housing, that is, housing put up by developers for sale at market

price. But the 1996 survey was carried out prior to the ending of the welfare allocation of

housing. While some work units continued to build housing for their workers, in

Guangzhou supply-side commodification was well under way. The bulk of new housing

supply was provided by real estate developers, although the main buyers remained the

individual danwei. In the sample only about 25 percent of the households purchased or

rented directly in the open market (Li, 2000). The rest remained within the subsidized

housing sector. In this sense, the 1996 sample still provided a snapshot of the general

housing situation of Guangzhou at the time of survey, despite its specificity. Surely,

caution has to be exercised in interpreting the findings based on the survey. By definition,

all respondents interviewed were recent movers. Moreover, they were either those who

were privileged enough to be assigned by the given danwei or municipal housing bureau

new apartments, or those who were able to purchase or rent in the open market. All these

suggest a built-in bias towards the better-to-do groups. As such, the degree of housing

inequality revealed by the sample is likely to be an underestimate of the true extent.

However, by introducing statistical controls in a multivariate setting, it is still possible to

provide reasonable estimates of the effects of individual factors on housing consumption.

The sampling frame was constructed by reference to the list of presale commodity

housing projects issued by the Municipal Land and Housing Administration Bureau over

the period January 1992 - August 1994. The target sample size was 1000 housing units

(and hence 1000 households). A multi-level probability proportional to size (PPS)

sampling strategy was adopted. In particular, the sample was designed so that the number

of housing units surveyed in each of the eight urban districts of Guangzhou at that time

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was proportional to the total number of presale housing units in the given district. Within

each urban district, a number of urban streets (or sub-districts) were selected as sampling

spatial clusters on a randomized basis, according to the size distribution of the sub-

districts in respect to the number of housing units. Finally, each cluster contained 25

sampled housing units, again selected on a randomized basis. This geographically based

sampling strategy ensured adequate representation of different types of residential areas

in different parts of the city. Included in the questionnaire were a wide range of questions

on various aspects of housing consumption as well as on the socio-demographic attributes

and employment characteristics of each member of the household. It took on average 45-

50 minutes to complete an interview.

In comparison, the 2005 survey was a more general survey, with the target

population being all households in Guangzhou. Again, a multi-level PPS sampling

strategy was adopted. Street- or Sub-district-level tabulations provided by the Public

Security Bureau on the size distribution of households (including those without the local

hukou or household registration status) over the former eight urban districts plus the

newly incorporated districts of Panyu were used to construct the sampling frame. The

target sample size was 1200, to be distributed according to the PPS principle over the

nine urban districts surveyed. Again, for a given urban district a number of spatial

clusters or urban streets were selected and then for each selected cluster 25 households

were sampled following the PPS principle on a randomized basis. Comparison with data

given by the 2005 One Percent Sample Census shows reasonably closed correspondence

(Li, forthcoming). However, although the Guangzhou survey under-sampled migrants

without proper hukou in the city; this is largely because only households residing in

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permanent housing were interviewed. It may be argued that the 2005 Guangzhou survey

provides a reasonably good snapshot of the housing consumption pattern in the city at the

time of survey. The questionnaire employed was constructed with reference to the one

used in the 1996 survey, although the 2005 questionnaire tried to elicit detailed

information also on residential and employment history.

Overall Housing Inequality

Housing is a multi-dimensional good. Size of dwelling, type of structure in which

the dwelling is located, internal design, decoration and furnishing, dwelling age and state

of maintenance, estate and neighbourhood amenities, accessibility to employment and

shopping facilities, etc. are all important dimensions affecting how much and what kind

of housing service a dwelling provides. While it is not absolutely essential, the

construction of a composite measure would facilitate the comparison of the state of

housing well being between individuals and households, and hence the assessment of

housing inequality.

Commonly employed in the analysis of housing demand is the price or rent

(annualized price) of the dwelling unit. Hedonic theory argues that the price of a

dwelling, which is the outcome of the interplay between a myriad of supply and demand

factors, can be seen as the summation of the values attached to individual housing

attributes (Olsen, 1987; Straszheim, 1973). Thus, price or value is commonly used as a

measure of the composite good, housing service. However, the use of the price variable

presumes the presence of a more or less competitive market, which is clearly not the case

in China where the state continues to exert substantial influence on the land and housing

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market and where collusion between real estate developers and local government is

prevalent. The price variable was particularly problematic in 1996 when the great

majority of housing was sold by danwei and the municipal housing bureau to sitting

tenants at heavily discounted prices.

In this study dwelling floor area (in m2) is used to gauge the amount of housing

service consumed. Admittedly this is not a perfect measure. But this is a variable that is

more readily susceptible to inter-temporal comparison. The fact that the 1996 survey

included only newly completed housing whereas the 2005 survey tried to proportionately

include all types of housing could render the comparison somewhat problematic.

However, Guangzhou, along with other major cities in the country, has experienced a

housing construction boom unseen elsewhere in the world. The housing stock is very

new, mostly built in the 1990s and beyond. The massive scale of housing construction in

recent years has introduced a degree of standardization in the floor space measure for the

two surveys.

Between the two survey years the Chinese economy and society had undergone

tremendous changes. Almost incessant double-digit over the period growth not only

resulted in a general increase in income, but it also brought about much greater

concentration of wealth towards business proprietors, managers of major state-owned

enterprises, and people with access to valuable business and state information and with

close connections to government at different levels. Further, the enterprise reform of the

1990s and the growth of the foreign-funded enterprises, which tended to reward the top

managers and sought-after professionals remuneration packages mimicking those in their

home countries, led to much enlarged income spread. On the housing front, the 1998

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reform ended the welfare allocation of housing. Since then, wealth and income have

probably become the single most important factors underlying housing consumption. All

these argue for a substantial increase in housing inequality.

Figures 1a and 1b plot the distribution of dwelling floor space in the two samples.

The mean floor space consumed increased slightly from 58.9 m2 for the 1996 sample to

62.3 m2 for the 2005 sample. But this rather small increase has to be judged against the

fact that the 1996 data were only concerned with newly completed commodity housing

units, which were of better quality and generally larger than the pre-1949 old dwellings as

well as danwei apartments built in earlier times. Also, the data and probably pertain to the

better-to-do groups. It may be safe to conclude that the overall improvement in housing

consumption is substantially larger than the difference in the mean value between the two

samples. The corresponding standard deviations were 22.93 m2 and 25.81 m2,

respectively. Thus, while in both years there existed quite substantial variations in the

level of housing consumption, the difference between the haves and have-nots appeared

not to be too extreme.

Figures. 1a and 1b: The distribution of dwelling floor space in 1996 and 2005

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The coefficient of variation (CV), defined as standard deviation divided by the

mean value, is a commonly employed measure of inequality. The CV increased slightly

from 0.39 for the 1996 sample to 0.41 for the 2005 sample. The slight increase in the CV,

again, has to be judged against the difference in the target populations of the two surveys.

Above it was argued that the 1996 sample would probably bias the inequality estimate

downward. If this is indeed the case, then it is safe to conclude that the increase in

housing inequality was likely to be even smaller than what the difference in CV suggests.

Another commonly employed measure of inequality is the Gini coefficient, which ranges

from 0 (absolute equality) to 1.0 (absolute inequality). Both samples yield a Gini

coefficient of 0.21, again indicating stable and relatively mild housing inequality levels,

irrespective of the massive changes that had taken place both in the housing and job

markets between the two survey years.

This is a rather surprising finding. In both samples migrants were under

represented. The degree of housing inequality revealed would be substantially higher if

the sampling bias was corrected. But this would not materially affect the conclusion that

the degree of housing inequality in Guangzhou remained more or less the same between

1996 and 2005. Perhaps it may be noted that neither the CV nor the Gini coefficient

computed takes into consideration spatial variations and hence accessibility to jobs,

schools, medical services, shopping and neighbourhood amenities. In Guangzhou and

other cities of the country, almost all good schools and hospitals as well as up-market

shopping facilities and entertainment centres, in addition to the bulk of high status

administrative and managerial jobs, are located within or close to the inner core (Li and

Li, forthcoming). Previous studies reveal strong residential preference for central

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locations in the city, which implies steep rent gradients (Wang and Li, 2006). Dwellings

with the same floor space in central locations and those in distance suburbs yield quite

different levels of utility to the household. To the extent that better-off households are

able to reside in highly priced commodity housing in redeveloped inner-city

neighbourhoods while large numbers of xiagang workers and retirees have been forced to

relocate to far-flung suburbs lacking amenities, the actual degree of housing equality in

more recent years could be a lot more severe than was indicated by the CV or Gini

coefficient reported above. Moreover, market-led redevelopment has turned many inner-

city neighbourhoods and former work-unit compounds to homogeneous housing estates,

both in terms of socioeconomic composition and dwelling size. As a result, the

geographical distance between the better-to-does and the less-well-offs has probably

increased by a wide margin. This increase in residential differentiation could greatly

heighten the sense of injustice especially among the deprived.

Changes in the Nature of Inequality

The same level of housing inequality could arise from different underlying

factors. This section reports the result of multiple regression analysis, which analyses the

determinants of housing consumption in the two survey years. Previous works on housing

demand suggest that demographic characteristics such as household size, age of the

household head, and stage in the family life cycle are fundamental in determining

housing needs and preferences and hence the amount of housing consumed (Clark and

Dieleman, 1996). Of course, in a market setting, income is of paramount importance.

Studies conducted in the United States show that the income elasticity of the demand for

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housing service is in the region of 0.7, that is, an 1 percent increase in income will result

in 0.7 percent increase in housing consumption, other things being constant (Olsen,

1987). Education attainment, as a measure of human capital, is a major determinant of

income; in addition, education also structures residential preferences and the ability to

make appropriate housing decisions under fast-changing market conditions. Occupational

status is another constituent component in assessing socioeconomic status. Multinational

firms generally offer subsidized housing to expatriate workers and high ranking

managerial and professional staff.

In a socialist redistributive economy, rank in the work unit and the CCP largely

determines the ability to command redistributive powers (Szelenyi, 1983; Bian and

Logan, 1996). Advancement along the job ladder is closely tied to formal education

credentials when the ability to generate profit is not a major concern. In the case of

China, studies using data of the 1980s and 1990s have found all three variables, namely,

education, occupational rank and CCP membership, to be major determinants of urban

housing consumption (Bian and Logan, 1996; Huang and Clark, 2003; Li, 2000; Li and

Li, 2006). Another variable which is of importance in structuring access to resource under

state socialism is the nature of the work unit to which an individual is affiliated. Priority

sectors are better endowed with resources. Also, national-level state enterprises are much

better resourced than provincial-level ones, which, in turn, are much better resourced than

enterprises established by city and county authorities. Collective enterprises, or

enterprises set up by street committees in urban areas and township authorities in rural

areas, are the least resourced (Bian and Logan, 2003; Li and Li, 2008). Of course, there is

hukou status, which assumes particular importance with hundreds of millions of migrants

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of rural origin flocking to the country’s largest metropolitan centres.

In the regression models the dependent variable is log (dwelling floor space)

(m2).2 The independent variables include: (1) age, household size, family type (0 = family

with children, 1 = otherwise); (2) log (household income per annum) (RMB 10000); (3)

education (0 = tertiary, 1 = primary or lower, 2 = junior secondary, 3 = senior secondary);

(4) occupational rank (0 = cadre or managerial, 1 = unskilled worker 2 = skilled worker, 3

= professional, 4 = others); (5) danwei type (0 = non-state, 1 = state); (6) source of

housing provision (0 = danwei, 1 = market, 2 = municipal housing bureau, 3 = others);

and (7) membership in the CCP (0 = non-member, 1 = member), and (8) hukou (0 = non-

local, 1 = local). The results are given in Table 1. The estimated equations for both years

are highly significant. While the R2 obtained are not very high, 0.33 for 1996 and 0.31

for 2005, they are quite acceptable for regressions employing micro-level data.

Nonetheless, the exclusion of location variables in the model probably reduces the

goodness of fit.

Table 1.Linear regression analysis in 1996 and 2005

1996 2005
Independent variable: log dwelling floor space R square = 0.327 R square = 0.305
(square meters)
B B
Age of head 0.003** 0.000
Household size 0.051*** 0.060***
Family type: married with children -0.048 0.014
Log (Household income per annum) (RMB 10000) 0.136*** 0.187***
Education
Primary or lower N.A. 0.036
Junior secondary -0.099** -0.064

2
The logarithmic scale gives better fit than the linear scale. Also with income also expressed in logarithmic
scale the associated parameter gives the income elasticity estimate. The parameters of other variables give
the percentage change in floor space resulting from one unit change of the respective variable, which is
more easily to be subject to inter-temporal comparison.

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Senior secondary -0.145*** -0.003
Occupation rank
Unskilled worker -0.098** -0.048
Skilled worker -0.155*** -0.038
Professional -0.022 0.022
Others -0.095* -0.110
Danwei type: state 0.007 -0.010
Source of housing provision
Market -0.040* 0.140***
Municipal Housing Bureau -0.342 -0.271***
Others -0.065 0.138***
Membership in the CCP 0.106*** 0.113***
Hukou: local -0.266*** 0.119***
CONSTANT 3.892*** 1.713***
*significant level at 0.05; ** significant level at 0.01; ***significant level at 0.001

Let us first consider the demographic attributes. Age, which correlated closely

with seniority in the workplace especially under low or non-existent job mobility in the

former centrally planned economy, is highly significant and positive for the 1996

equation. Numerically, every 10 years increase in age was associated with 4 percent

increase in housing space. However, age is not significant in the 2005 equation and the

coefficient estimate is close to zero. Probably this is because danwei provision of housing

was no longer common in the latter year. Household size is significant in both equations.

In terms of magnitude, in 1996 one extra person was associated with 5.6 percent more

floor space; in 2006 the corresponding figure was 3.4 percent. With respect to family

type, in both years no significant difference was found between families with and without

children. However, individuals who were single or widowed consumed slightly more

housing space in 1996 but substantially less housing space (19.7 percent less in

comparison with families with children) in 2005. The latter finding is more akin to the

situation in most market economies.

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Next, we examine household income. While the variable is significant and

positive in both equations, the magnitude of influence differs tremendously. In 1996, the

parameter estimate, which gives the income elasticity of demand for housing, was 0.14,

whereas in 2005 it increased to 0.18. As the income measured employed refers to current

income rather than permanent income, the true income elasticity in Guangzhou in both

years would be somewhat higher than these estimates. As expected, income has become

increasingly important in determining housing consumption in China, although the 2005

estimate, if allowed for under-estimation, is still somewhat below those obtained in

Western economies.

Education attainment was a highly significant variable in 1996. People with

tertiary education had much higher level of housing consumption than did people

without. But in 2005, all education dummies were insignificant. Education probably

continued to play a significant role in determining a person’s occupation and income and

through this on housing consumption; however, its direct effect was no longer obvious

with the deepening of the market-oriented reform.

The occupational status dummies generally yield the expected sign. In both years

managerial and professional workers enjoyed significantly more housing space than

either non-skilled or skilled workers. The differences, after controlling for income and

other variables, are larger in the 1996 equation than in the 2005 equation. This suggests

the diminishing effects of pure job ranking on housing consumption, a finding which is

not too dissimilar with the finding on education attainment reported above.

None of the danwei dummies in either equation is significant. In Guangzhou, even

back in 1996, nature of danwei (whether being a state work unit or not) did not have any

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significant influence on how much housing an individual consumed. Source of housing

provision, however, was a major determinant of housing consumption in both years.

More specifically, housing provided by the municipal housing bureau (accounting for 7.8

percent of the 1996 sample and 7.7 percent of the 2005 sample), was smaller than

housing provided by individual danwei by 33.9 percent in 1996 and 26.4 percent of the

sample in 2005. Housing obtained in the market (accounting for 42.9 percent of the 1996

sample and 60.8 percent of the 2005 sample), which did not differ too much in size from

housing from danwei in 1996, was 14.1 percent larger in 2005. In other words, people

who were able to move from municipal and danwei housing to market housing, including

those who trade their reform housing unit for better dwellings in the market, were those

who gained most in terms of floor space consumed.

Previous works established the importance of CCP membership in access to

housing resource. In both regression equations, CCP membership (which accounts for

23.1 percent of the 1996 sample and 15.1 percent of the 2005 sample) is significant at the

0.001 level. Also the magnitude of influence is about the same: 10.0 percent for the 1996

equation and 11.9 percent for the 2005 equation. Considering that membership in the

CCP probably also affects promotion prospects, the total effect of CCP membership on

housing consumption in Guangzhou is quite substantial, despite the drive towards

marketization and the neoliberal rhetoric in conjunction with globalization.

Finally, there is hukou status. Surprisingly, the coefficient estimate for the 1996

equation is negative and significant at the 0.001 level, although the one for the 2005

equation is positive and of marginal significance. Of course, the rather surprising finding

for 1996 may indicate that while migrants at the time were discriminated in the job

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market, and because of this, lived in relatively poor housing, housing discrimination per

se was not apparent. However, this was probably due to the fact that the 1996 sample

only contained recently built commodity housing, and the migrants included in the

sample were the better off groups. Similar but smaller selectivity bias was likely to be

present in the 2005 sample. Migrants who did not have permanent residence were

excluded from the survey. Nonetheless, the findings do suggest that for those migrants

who are able to establish themselves in the city and move up the job ladder, their housing

lots probably are not too different from those holding the proper hukou.

Concluding Remarks

The results of the statistical analysis using the 1996 and 2005 survey data reveal

both quite surprising findings and those in line with expectation. Regarding the overall

level of housing inequality, the two surveys yield similar CVs and almost identical Gini

coefficients. Both measures indicate relative mild levels of inequality in the two years. At

least in the case of Guangzhou, which was relatively advanced in its transition to a

housing regime based primarily on market provision back in 1996, the newest phase of

the reform which called for the cessation of the welfare allocation apparently has not

worsened significantly housing inequality. Most people have been able to benefit from

the improvement in housing space brought about by the massive housing construction

boom in recent years. Of course, in cities where the state sectors had a total dominance

over the economy and society, and where the danwei provision of housing was much

more entrenched, the enterprise reform and the latest marketization move in the housing

realm could bring about vastly different effects on housing distribution.

21
With respect to the individual factors affecting housing consumption, life-cycle

effects have remained relatively weak, although singles (including widowed) in the latter

year consumed much less housing space than family households. Income has assumed

greater importance, but the income elasticity of demand in 2005 was still quite low, even

if the income measure employed refers to current rather than permanent income.

Education per se in the latter year no longer yielded significant effect on dwelling floor

space. Occupational rank remained to be effective, however, the magnitude of influence

also declined. All these point towards greater market influence on housing consumption

than in 1996. But, CCP member remained a major factor affecting housing space

consumed, and the magnitude of influence in 2005 was even slightly larger than in the

1996. On the whole, it may be concluded that the nature of housing inequality in

Guangzhou differed very little between the two years.

22
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