Social and Economic Implications of Chinese Housing Provident Fund Program and Its Policy Transfer Failure

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Date Published
Primary Author Min Wang
Other Authors
Country China


Within the three decades of Chinese housing reform, Chinese housing supply system shifted from planned public housing system to the market oriented system. With the process of the housing monetary allocation and housing privatization, Chinese government encourages the majority of urban households to purchase housing from the housing market. In order to accumulate the initial capital for the workers to purchase a home, the Chinese government has established the Housing Provident Fund (HPF) system by learning from Singapore’s CPF system (Central Provident Fund system). Research into Singapore’s CPF system indicates that through a carefully controlled circular flow of funds, CPF savings have been used to enable individuals to fund the construction and ownership of government flats, and Singapore’s HDB (Housing and Development Board) system is an important reason for the success of the CPF system (Sherraden ,Nair &Vasoo etc,1995; S.Vasoo& Jamed Lee,2001). This paper asks whether the Chinese HPF system has achieved (or might achieve) the same policy objectives and consequences? If not, is there a policy transfer failure of some kind? This paper addresses this question by examining the evidence on the social and economic consequence of China HPF system. It begins with a critical analysis of the HPF policy design and its current situation, making a summary assessment on HPF program and proposes that a strong vertical inequity exists caused by the mismatch between HPF contributors and HPF loan beneficiaries. Followed is the comparison between the HPF and CPF-HDB model from several aspects. The paper compares the housing structure in the two countries and proposes that the structure of Singapore housing market is non-replicable, followed is the discussion about HPF policy transfer failure based on the comparison of the policy mechanism between the two programs. The conclusion part puts forward that the HPF contributors still have to face the gap between the HPF mortgage loan rate and the HPF deposit rate. In addition, China faces a different and dynamic housing market structure, and, from the aspect of account holders, they have to face with the high housing price of excessive housing commercialization. Therefore, the transfer of the Policy leads to different effects and future success will need to be better tailored to local requirements.

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