Shifting emphasis in the role of the state: Urban housing reform in China 1

Studies on the role of the state and its control over the economy favour a reduction of state involvement in the process. While such efforts were conducive to the political and economic arrangements in the capitalist world, China presented an entirely different challenge. The state played a dominant role in the production and delivery of all public goods and exercised effective control over the economy in China. However, the changing circumstances following China's adoption of liberalisation have set in motion a number of changes including an apparent reduction of state control over the economy. A case in point is the shift in the role of the state in the production and distribution of public housing in the urban areas. There have been efforts to introduce a market system in housing provision through privatisation, commercialisation and socialisation, and these have resulted in increased private home ownership as well as the formulation of new regulations to govern the real estate market. The intention was to gradually transfer the responsibility of production and management of this essential commodity to property development and professional management companies. However, the state has continued to play a prominent role on the pretext of protecting the citizens from negative consequences of the reforms. The state must take into consideration the nature of the society and its tradition of providing public services and adjust policies to derive maximum benefit from the reforms. As a result, the role of the state has shifted, rather than reduced, and the transformation provides a new perspective on the potential pitfalls in liberalising and rolling back the state.