Urban renovation funds distort realty markets in small cities

ACCORDING TO REPORTS, the central government will soon tighten up its control over the urban renovation funds provided to cities. Beijing News commented on Tuesday:

In most third- and fourth-tier cities, where the supply of houses exceeds demand, local governments tend to give money directly to the residents in areas to be renovated, so they can buy new properties themselves.

The money comes from central government loans that local governments pay back with some of the income they receive from selling the land to real estate developers, where shanty towns are demolished. And the residents spend most of the compensation money buying new houses elsewhere in the city.

Such a cycle would seem likely to create a multiwin situation, keeping the housing market in equilibrium. But that assumption has not held water in practice, as it ignores the local governments’ and the real estate developers’ insatiable appetite to seek profits from the land and house deals.

The true picture is that the housing prices in some small cities have risen rapidly, and land has become more and more expensive. The funds that the central authorities provide with the intention of meeting people’s basic housing needs have evolved into an indispensable link in the heating up of the realty markets in small cities.

The compensation the residents receive for relocation, which used to be sufficient for them to buy new houses, is now only enough to pay for the down payment for a mortgage in some cities, where housing prices have become irrational.

In just two years, the supply of houses in some small cities has fallen short of supply. So if the central government reduces the renovation loans it offers to the governments of small cities, it will immediately put an end to the vicious cycle, keeping the real estate market in small cities developing on the right track.

The woman seemed very “proud” of her rule-breaking. In the video clip, she said: “We are finishing our challenge! They forbid us to swim here, but now we are swimming against their rules.”

While she spoke, some of her companions were already swimming in the lake, which many netizens recognized as Daye Lake where swimming is prohibited because it is a source of drinking water for Xi’an, Northwest China’s Shaanxi province.

The video clip aroused fierce discussion and heavy criticism of the swimmers online. Some said the swimmers’ behavior was immoral as well as illegal, while some pointed out that by shooting the video clip and spreading it online, the swimmers have set a very bad example that might encourage others to emulate their illegal behavior.

From a larger perspective, the swimmers are only a small sample of the large number of tourists who behave in an uncivilized manner every year. To curb their uncivilized behavior, at least two measures are necessary. First, education must be strengthened, so that more tourists know the danger involved in breaking rules. Second, the laws must be more strictly enforced so that those who break them pay the price.

Now the video clip has been shared widely online, which is evidence of the woman and her companions’ illegal deeds. All people have to register under their real name to upload and share videos, so it should not be too difficult to identify the woman and her companions and hold them answerable for breaking the law.