Migrant Chinese laborers work at a demolished residential area in Shanghai. (Photo : Reuters)
China has earmarked new investment for the construction of low-cost housing infrastructure, a senior official from the Housing and Urban-Rural Development Ministry said on Friday, in a move expected to boost the sagging property and construction sector.
Another 10 billion yuan ($1.6 billion) was allocated for infrastructure construction in shantytown renovation at a meeting of the State Council on Wednesday, said Housing and Urban-Rural Development Vice Minister Wang Ning in a statement in Beijing.
Wang noted that the government's support for shantytown renovation has been relatively aggressive this year. "Within such an economic situation, it is not easy for the central government to set aside so much money for this sector."
The Chinese government has set aside 149.4 billion yuan from the central budget to shantytown rebuilding this year and 36.5 billion toward renovating dilapidated rural housing, he added.
Shantytown renovation accounts for a large portion of the national budget this year, which is 477.6 billion yuan, the central government said earlier in March.
Xhang Hanya, president of the Investment Association of China, said that the new funding is good news for property developers, as many of them also provide renovation services for low-income housing to local governments.
"Financial support from the central government is limited, and mainly aims at spurring local investment," said Zhang.
According to data from the National Bureau of Statistics, the amount of land purchased for real-estate development fell by 31 percent for the first five months of 2015, with new construction slumping down to 16 percent.
On Wednesday, the State Council decided to set an action plan in motion to rebuild 18 million low-cost housing units and renovate dilapidated rural houses for 10.6 million households starting this year until 2017. Central and local government budgets will be the two major sources of financing for the projects, with the central government urging regions to make funds available to support the budgeting of local governments for shantytown renovation.
For cities with budget shortfalls, provincial governments can offer help by issuing local government bonds on their behalf, said Wang.
Original financing platforms can also go through market-oriented restructuring in order to participate in shantytown rebuilding projects, he added, noting that the government is also encouraging public-private partnerships in order to attract more investment.
