Crisis: “Housing Policies” Become Life-and-Death Battle Between Chinese Communist Party and Residents

In 2025, the Chinese Communist Party implemented the “housing voucher resettlement” policy in multiple provinces and cities as a crucial tool for urban renewal, urban village transformation, and relocation settlement, which sparked widespread controversy. Authorities claim that housing vouchers can help reduce housing inventory, stimulate the real estate market recovery, and potentially become a future trend. However, experts pointed out that housing voucher resettlement cannot solve deep-rooted structural issues such as the imbalance between housing supply and demand, lack of resident confidence, and low consumer willingness, and aggressive promotion may escalate social conflicts.

“Housing vouchers” refer to vouchers provided to displaced households during urban evictions instead of direct cash compensation.

These vouchers, in the form of “IOUs,” restrict usage, requiring residents to purchase newly built commodity houses in designated time and areas. The applicable scope and duration of housing vouchers vary across regions but generally tie to individual identities, prohibiting resale, mortgage, or exchange for cash.

On March 11th, Nanjing announced the “Nanjing Resettlement of Housing Voucher for Residential Housing Collection Measures,” bringing new changes to the voucher policy by allowing cross-district home purchases and including urban renewal and urban village transformation within the scope of usage. Housing vouchers can now be used not only for residential properties but also for non-residential properties (including parking spaces, commercial offices, etc.) with a validity period of 12 months.

Similarly, on the same day, Luoyang, Henan, issued the “Implementation Plan for Luoyang’s Urban Village Transformation by Purchase Replacement,” expanding the citywide implementation of purchase replacement (including housing voucher resettlement). The plan specifies that purchasing housing sources for replacement (including housing voucher resettlement) will be carried out within Luoyang’s urban areas, involving residential projects that have started but not yet sold and have obtained residential presale permits within the jurisdiction.

As a pioneering pilot region for China’s housing voucher resettlement policy, Henan Province implemented the policy in Zhengzhou as early as May 2022 to advance greenhouse area transformations through housing vouchers. In early 2025, Zhengzhou continued to promote the use of housing vouchers, launching incentive mechanisms such as a 10% additional subsidy for home purchases within 90 days, aiming to increase resident acceptance, covering multiple eviction projects citywide. Housing vouchers typically have a validity period of 12 months and cannot be cashed out.

Shanghai, a first-tier city, started implementing the housing voucher resettlement policy from 2024. In January 2024, Qingpu District issued the first housing voucher citywide used for local urban village transformation projects, enabling residents to purchase new built commodity houses within specified housing stocks, with a validity period of 12 months. The housing vouchers are limited to purchasing new houses in designated areas, not transferable or cashable.

Subsequently, areas like Huangpu, Xuhui, Minhang districts progressively followed suit, expanding the housing voucher policy citywide. Huangpu district notably encourages residents to choose housing vouchers in old neighborhood renovations, even canceling cash compensations in some projects.

In the “Shanghai Urban Renewal Action Plan (2023-2025),” completing 3.1 million square meters of old residential housing renovations by 2025 is outlined, with housing vouchers explicitly listed as one of the main resettlement methods.

Another first-tier city, Guangzhou, issued its first citywide housing voucher in January 2024, allowing residents to purchase newly built commodity houses at designated locations with direct deduction of housing payments using the voucher. Subsequently, the housing voucher policy quickly expanded citywide, especially widely used in urban village transformations and old district renovations. The housing vouchers are applicable for residential and parking purchases, allowed for a single transfer, and unredeemed portions upon expiry can be compensated in cash, with a validity period of 12 months.

In early 2025, Guangzhou further expanded the housing voucher usage scope, covering the entire city’s new built commodity housing inventory, introducing incentive mechanisms such as a 10% additional subsidy for home purchases within 90 days. On February 20th, Mayor Sun Zhiyang indicated in the “2025 Guangzhou Municipal Government Work Report” the need to accelerate urban renewal efforts, leveraging housing vouchers and purchasing existing housing stocks to promote diversified resettlement methods.

According to the China Index Research Institute’s incomplete statistics, since the introduction of housing vouchers, over 90 cities (districts) nationwide have encouraged the use of housing vouchers for relocation resettlement. Why are more and more cities enthusiastic about housing vouchers?

In recent years, as the real estate market continues to decline, many local governments that have long relied on land finances are facing economic and financial pressures. During evictions, they have had to reduce cash compensations and instead promote housing voucher resettlement measures.

On March 17th, the National Bureau of Statistics of China announced that from January to February, the national sales area of new commodity houses reached 1.07 billion square meters, a 5.1% year-on-year decrease, with sales amounting to 1.02 trillion yuan, a 2.6% year-on-year decline. In February, in 70 large and medium-sized cities, the average year-on-year decline in sales prices of new commodity houses and resale houses in first-tier cities reached 3.0% and 4.9%, respectively, whereas second-tier cities saw drops of 4.7% and 7.4%.

As a pillar industry of the Chinese economy, the ongoing decline in the real estate sector is dragging down economic growth and exacerbating deflationary pressures.

According to official statistics from the National Bureau of Statistics of China, in 2024, the national consumer price index (CPI) rose by only 0.2% year-on-year, while in January 2025, there was a 0.5% year-on-year increase followed by a 0.7% decrease in February. The producer price index (PPI) for industrial enterprises consecutively fell for 28 months, with a 2.2% year-on-year decrease in February 2025. These trends indicate not only stagnating price levels but also sustained declines, squeezing business profits and diminishing consumer purchasing power.

For local governments, the ongoing real estate downturn is further exacerbating financial strains and worsening local debt issues. In 2024, national real estate development investment fell by 10.6% year-on-year, leading to a significant shrinkage in local government land transfer revenues. Data from the Ministry of Finance of China shows that in 2024, local government land transfer income decreased by 16% year-on-year, marking the third consecutive year of double-digit declines since 2022 and an expansion of the decline from 13.2% in 2023.

Simultaneously, local debt levels continue to rise. Official figures indicate that by the end of 2024, the total balance of the central government’s debt stood at approximately 82.11 trillion yuan, accounting for around 60.9% of GDP. Moreover, there exist significant hidden debts.

By the end of 2023, the hidden debt in financing platforms of local governments in China reached an estimated 6 trillion yuan, constituting 47.6% of GDP according to a calculation by the International Monetary Fund (IMF).

Under these circumstances, authorities are compelled to focus policies on “stabilizing the real estate market” and have launched the so-called “Three Major Projects” to further expand urban renewal and urban village transformation to bolster land transfer revenues and revitalize fiscal resources.

On February 28th, Vice Minister of Housing and Urban-Rural Development of China, Jiang Wanrong, announced that in 2025, the scope of urban village transformations implemented nationwide would extend from the 35 urban areas with a resident population of over 3 million to include prefecture-level cities and above (nearly 300 urban areas). On March 9th, Minister of Housing and Urban-Rural Development of China, Ni Hong proclaimed the aim of incorporating all urban areas constructed before 2000 into city renovation projects.

However, with already stretched local finances, where will the funds come from to support these eviction projects? Faced with the multiple crises resulting from China’s economic downturn, “housing vouchers” have become a lifeline for the Chinese Communist Party to ease financial pressures.

Huang Zhengxue, Director of the National Land Development and Regional Economic Research Institute of the National Development and Reform Commission, stated in an interview with Chinese media “Zhongfangbao” that the introduction of housing vouchers in the current context of tight local finances and declining housing prices aims to alleviate local financial pressure and stabilize the real estate market. Li Yujia, Chief Researcher at the Guangdong Provincial Urban Planning Institute, mentioned that for the government, housing vouchers can save relocation costs, ease budgetary pressures, while for developers, it can unleash substantial demand for home purchases, driving inventory turnover.

Nevertheless, can housing vouchers truly achieve the desired effects of stabilizing the real estate market and unlocking significant home purchasing demand?

China issues expert Wang He, in an interview with The Epoch Times on March 22nd, stated that housing vouchers cannot resolve the fundamental issues of a downturn in the real estate market. The policy itself has limitations, and if forcibly promoted, it could lead to social conflicts.

Firstly, housing vouchers do not address the issue of supply-demand imbalance. According to data from Centaline Property, as of the end of January, the inventory turnover periods for new homes in key first and second-tier cities still exceeded 20 months. For instance, Changchun and Beijing had turnover periods of 30 months and 28.5 months, respectively. By the end of February, the total unsold area of commercial homes nationwide reached 799 million square meters, a 5.1% year-on-year increase.

Secondly, housing vouchers do not resolve the problems of low resident consumption willingness and confidence. Official data from the Chinese Communist Party indicates that the average urban unemployment rate in 2024 was 5.1%, excluding over 200 million flexible employment individuals. With job scarcity, unstable incomes, and shrinking consumption, who dares to loan to purchase homes? Not to mention the numerous “mortgage slaves” carrying house loans.

According to data published by the People’s Bank of China, from January to February, nationwide resident loans increased by 54.7 billion yuan, an 86% year-on-year decrease. Short-term loans notably decreased by 323.8 billion yuan, indicating a significant decline in consumer spending. Consequently, on March 14th, the China Banking and Insurance Regulatory Commission issued a notice to financial institutions, urging them to develop consumer finance, boost consumption, increase personal consumption loan issuance, relax loan limits, terms, and interest rates.

Data from the Bank for International Settlements reveals that as of June 2024, the total household debt in China reached 6.43 trillion yuan. In 2024, the nationwide balance of individual mortgages amounted to 37.68 trillion yuan, constituting around 60% of residents’ total debt. This indicates that most household debts in China are concentrated in the real estate sector. With declining housing prices, families have experienced significant wealth erosion, leading to a drastic reduction in their purchasing power.

Thirdly, forcefully pushing housing vouchers will exacerbate social conflicts. As a tool for eviction settlements, housing vouchers possess inherent aspects of compulsion, restriction, and intrinsic unfairness.

Given in the form of “IOUs,” housing vouchers restrict residents to purchase homes within specified periods and areas, prohibiting cashing out or transfers. This strips residents of their freedom to dispose of compensation, potentially fueling dissatisfaction. If local governments resort to forced evictions or suppression of dissent to promote the voucher policy, it could directly ignite social conflicts. In fact, in areas like Zhengzhou where housing vouchers were early implemented, protests by residents have occurred.

A YouTube video from November 26, 2024, shows villagers gathering in Gongzhai Village, Huji District, Zhengzhou, protesting against replacing cash compensation with housing vouchers during evictions and demanding cash compensation instead. Villagers were mainly dissatisfied because the amount compensated by housing vouchers was significantly lower than market prices, and the designated properties carried risks of unfinished construction.

On March 19th this year, villagers from Hundian Village, Licheng District, Jinan, held a meeting to oppose the local government’s “housing voucher resettlement” policy, expressing concerns over the policy’s limited scope to house placements and housing vouchers, fearing poor housing quality and risks of unfinished constructions, resulting in widespread discontent and refusal to sign agreements.

Wang He highlighted that the majority of local governments can only rely on higher-level appropriations and borrowing to complete urban renewal and urban village transformation projects. The introduction of housing vouchers is a move by the government under the triple pressures of real estate downturn, financial strain, and inventory backlog. It serves as a “curveball” measure to clear inventory and a temporary solution for financial self-rescue but does not fundamentally address the issues of supply-demand imbalance and resident confidence insufficiency.

“The implementation process of the housing voucher policy is fundamentally a game between the government and residents. The government aims to clear inventory, relieve financial burdens, stabilize the real estate market with housing vouchers, whereas residents pursue discretionary compensation rights and housing security. With the aggressive promotion of housing vouchers, the fierce game between the government and residents will intensify, potentially leading to social crises if uncontrolled,” stated Wang He.