The Chinese Communist authorities recently announced a pilot program for a housing pension in 22 cities, triggering backlash and accusations of being a disguised property tax. Official clarification claimed that it would not use people’s money and explained the structure and funding sources of the housing pension, but mentioning contributions from local finances and land transfer funds raised further doubts. Economic experts pointed out that the CCP’s approach is a familiar tactic of gradual change, similar to the initial promotion of “retirement relying on the government,” ultimately burdening the people.
Vice Minister Dong Jianguo of the Ministry of Housing and Urban-Rural Development (hereinafter referred to as the Ministry of Housing and Construction) stated in a press conference on August 23 that cities such as Shanghai are piloting housing inspections, housing pension, and housing insurance systems. He mentioned that homeowners already have individual accounts through paying residential special maintenance funds when purchasing real estate, with the government focusing on establishing public accounts. The explanation sparked heated discussions online, with the public seeing it as a covert property tax.
An article in the official media outlet “Architecture Magazine” of the Ministry of Housing and Construction on August 26 criticized the misinterpretation of the housing pension system and emphasized that the planned public account is not funded by the people. However, netizens raised questions about the funding source.
Officials from the Ministry of Housing and Construction clarified through the state media on the evening of the 26th that the housing pension consists of individual accounts and public accounts. The individual account refers to the residential special maintenance funds deposited by homeowners according to current regulations; as for the public account, “from the perspective of pilot cities, local governments can raise funds through financial subsidies and consolidating land transfer income,” reiterating that “residents do not need to pay extra fees or increase their personal burden.”
On August 27, under related news, many mainland Chinese netizens continued to express doubts, stating, “Wait and see, just like the old saying ‘only raise one child, the government will provide for retirement,’ what about now?””It was the same when donating blood. Just remember, anything with slight benefits will never reach ordinary people.” “In the current economic situation, even fools would covet the meager coins in the pockets of the common people, fabricate, keep fabricating.” “The whole nation opposes it, hitting a wall! Think twice before proceeding in the future.”
Regarding the CCP’s official trial of the aforementioned housing pension, American economist David Huang, when interviewed by Dajiyuan, likened the housing pension to a maintenance fund. He mentioned that in the past, the maintenance fund in China was contributed by developers in a certain proportion; however, due to poor construction quality, most funds were embezzled. At that time, the money paid also lacked appropriate investment channels, and considering the difference in price indices then and now, the amount used for China’s aging buildings is insignificant.
He believed that the official promotion of the housing pension, with separate public and personal accounts, resembles the current social security fund operation. In the future, there will be a specific cost when selling land.
“This cost is said not to be borne by the people, but ultimately, all taxes and expenses related to real estate will still be borne by consumers.”
Regarding the need to utilize land transfer funds for the public account of the housing pension, an article by Xiong Zhi, published by the mainland self-media “Husi Kan” on August 26, questioned how surplus funds would support the construction of the housing pension given that land transfer income has been declining in recent years. The impact has severely reduced some local fiscal revenue, and in the future, it raises the question of where the extra money will come from to support the housing pension construction.
Against the backdrop of economic stagnation, China’s Ministry of Finance announced on August 26 that fiscal revenues in July decreased by 1.9% year-on-year; land transfer income dropped by 40.3% year-on-year, marking the largest decline since July 2022 for the second consecutive month.
Huang analyzed from another perspective, mentioning that whether it is the central or local government lacking funds, it depends on how the money is used. He suggested cutting unnecessary road construction, gala expenses, public consumption, and redundant party committees and departments, indicating that there is still plenty of money available. He even highlighted China’s capability to support universal health insurance in African countries and construction projects in Russia and Africa.
“You say they have no money, they actually do. It’s just that the money isn’t spent on the people; they spend too much money and are unwilling to allocate it to livelihoods.”
In an article on the Sohu website on August 27, concerns were raised about the existing property market. It noted that due to historical reasons, housing quality, and various issues, the current housing maintenance funds may not be sufficient to sustain large-scale housing inspections, maintenance, and preservation work in the future. Delving into the controversy over the housing pension, the key underlying dispute centers on how to balance the books related to the housing pension fund.
Some netizens stated, “If individuals don’t pay, where do individual accounts come from? It’s deceiving! I don’t understand why European houses can last for hundreds or thousands of years and still be habitable; our many large households in Shanxi with ancient courtyards have lasted for hundreds of years. Why do our houses age and need extensive repairs in just 20-30 years? Is it because our construction techniques are poor or are people morally corrupt?”
Huang predicted that the individual account of this housing pension will undoubtedly fall short in the future. Once the current funds are exhausted, it will gradually lead to people contributing, akin to boiling a frog in warm water, gradually compelling the public to bear the burden.
“The tactic is the same as the previous statement of ‘government-supported retirement’ and ‘don’t have many children for retirement,’ gradually transitioning to ‘retirement cannot rely on the government.’ In the future, even repairing houses can no longer rely on the government, and in the end, it will be the people who foot the bill.”