The new housing policy of the Ministry of Construction does not negate the market mechanism, says a signed article in Oriental Morning Post. An excerpt follows:

Minister of Construction Wang Guangtao said recently that the government should set limits on house sizes and prices when picking developers in public bidding for housing projects. He said, "We have learned from past experience that we can't solve the problem of social injustice by only relying on the market mechanism in housing, which is a basic human right and social guarantee."

His statement sets the tone for the future development of China's real estate industry. The government is to play an active role in the market supply.

When most urban residents are financially stretched in paying for housing, social stability is threatened. Therefore it is essential for the government to take action. But how to guarantee the effectiveness of the policies should be thoroughly considered.

The enhancement of the government's role in the housing market does not negate the market mechanism. On the contrary, administrative functions can only play an active role when they follow market rules.

Low-rent housing belongs in the category of government control. That is why the government will finance the construction of low-rent housing for low-income families.

The adjustment follows market rules. It remains important to increase competition among suppliers in the larger housing market. The government should allow more modes of housing construction so that a multi-layer market will be formed to meet the needs of different groups.

(China Daily 02/27/2007 page10)