Economic Observer Online
March 31, 2011
Translated by Qi Changlong
Original article: [Chinese]

Late last week, The Ministry of Housing and Urban-Rural Development issued a notice requiring local governments to seek public feedback in relation to the targets they were being required to set for the pace of growth in housing prices in their cities.

The call came as the end-of-the-first-quarter deadline for publishing their targets approached and in circumstance where, aside from Beijing, many local governments had stated that they aimed to limit the pace of rising housing prices to about the same rate as GDP and per-capita income growth.

Many interpreted the central minisrty's call to "reconsider" the targets as a signal that the central government was not impressed with the range of unambitious targets that were emerging.

Despite this call to reconsider targets, officials from the southern city of Guangzhou have since gone on record as saying they will not adjust their target.

Other cities like Lhasa and Xining, both located in the remote west of the country, are yet to even publish their targets.

However, two cities in the northeast of China, Changchun and Dalian, released their targets after the call came from the central government ministry and both cities have taken a noticably different approach from others, with Dalian aiming to limit growth in housing prices to between 3 and 5 percentage points below the city's GDP growth rate.

In addition to the tensions between local and central government over what constitutes approapriate ceilings for growth in housing prices, others argue that the policy of setting targets itself is flawed.

"The best solution is not to set a ceiling for the growth rate of housing prices, when these are released they just mess things up," according to Han Shitong, a researcher who used to work at the Public Economy Academy of Peking University.

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