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Financing Affordable Housing Through Compulsory Saving: The Two-Decade Experience of Housing Provident Fund in China

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  • Jie Chen
  • Lan Deng

Abstract

Housing Provident Fund (HPF), a compulsory saving scheme providing self-funded housing credit, is a significant provider of housing finance in several emerging economies. The Chinese HPF program constitutes the largest social housing finance program in the world. Yet, very few studies have examined it. This paper documents the history of China's HPF program, in particular, how it has evolved from a local experiment to a prominent national housing program. It then examines the program's management structure and the role of HPF lending in meeting China's housing finance needs. The paper also compares China's HPF experience with the HPF practices in other countries. Finally, the paper examines the challenges China's HPF program faces today and the efforts to address them. The paper concludes by discussing some of the broader lessons that can be learned from China's HPF experience.

Suggested Citation

  • Jie Chen & Lan Deng, 2014. "Financing Affordable Housing Through Compulsory Saving: The Two-Decade Experience of Housing Provident Fund in China," Housing Studies, Taylor & Francis Journals, vol. 29(7), pages 937-958, October.
    • Handle: RePEc:taf:chosxx:v:29:y:2014:i:7:p:937-958
    DOI: 10.1080/02673037.2014.923088
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    References listed on IDEAS

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    1. Bruno Martins & Eduardo Lundberg & Tony Takeda, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," Research Department Publications 4730, Inter-American Development Bank, Research Department.
    2. Bruno Martins & Eduardo Lundberg & Tony Takeda, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," Research Department Publications 4730, Inter-American Development Bank, Research Department.
    3. Martins, Bruno & Lundberg, Eduardo & Takeda, Tony, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," IDB Publications (Working Papers) 3742, Inter-American Development Bank.
    4. Asher, Mukul G. & Karunarathne, Wasana, 2001. "Social Security arrangements in Singapore: An Assessment," Discussion Paper 9, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
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    Cited by:

    1. Chen, Jie & Wu, Fulong & Lu, Tingting, 2022. "The financialization of rental housing in China: A case study of the asset-light financing model of long-term apartment rental," Land Use Policy, Elsevier, vol. 112(C).
    2. Richard Koss & Xinrui Shi, 2018. "Stabilizing China’s Housing Market," IMF Working Papers 2018/089, International Monetary Fund.
    3. Tommaso Gabrieli & Keith Pilbeam & Tianyu Wang, 2018. "Estimation of bubble dynamics in the Chinese real estate market: a State space model," International Economics and Economic Policy, Springer, vol. 15(2), pages 483-499, April.
    4. Cheng, Zhiming & King, Stephen P. & Smyth, Russell & Wang, Haining, 2016. "Housing property rights and subjective wellbeing in urban China," European Journal of Political Economy, Elsevier, vol. 45(S), pages 160-174.
    5. Prakash, Kushneel & Smyth, Russell, 2019. "‘The quintessential Chinese dream’? Homeownership and the subjective wellbeing of China's next generation," China Economic Review, Elsevier, vol. 58(C).
    6. Mengkai Chen & Yidong Wu & Guiwen Liu & Xianzhu Wang, 2020. "City economic development, housing availability, and migrants' settlement intentions: Evidence from China," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1239-1258, September.
    7. Xiang Zhang & Yanhuang Zheng & Chuanhao Tian, 2021. "Who Benefits from the Housing Provident Fund System in China? An Analysis of the Internal Rate of Return for Typical Employees with Different Incomes," Sustainability, MDPI, vol. 13(9), pages 1-18, April.
    8. Yilan Xu, 2017. "Mandatory savings, credit access and home ownership: The case of the housing provident fund," Urban Studies, Urban Studies Journal Limited, vol. 54(15), pages 3446-3463, November.
    9. Mei Liu & Qing-Ping Ma, 2021. "Determinants of house prices in China: a panel-corrected regression approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(1), pages 47-72, August.
    10. Dezhi Li & Yanchao Chen & Hongxia Chen & Eddie Chi Man Hui & Kai Guo, 2016. "Evaluation and Optimization of the Financial Sustainability of Public Rental Housing Projects: A Case Study in Nanjing, China," Sustainability, MDPI, vol. 8(4), pages 1-13, April.
    11. Hongyan Chen & Jinping Song & Huaxiong Jiang, 2023. "Inequity in Housing Welfare: Assessing the Inter-City Performance of China’s Housing Provident Fund Program," Land, MDPI, vol. 12(3), pages 1-17, March.
    12. Jie Chen & Zan Yang, 2017. "What do young adults on the edges of homeownership look like in big cities in an emerging economy: Evidence from Shanghai," Urban Studies, Urban Studies Journal Limited, vol. 54(10), pages 2322-2341, August.
    13. Chen, Mengkai & Liu, Tong & Wang, Xianzhu, 2024. "The effect of the housing provident fund on housing affordability in Urban China: A quantitative analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 1-11.
    14. Zhang, Mengzhu & He, Shenjing & Zhao, Pengjun, 2018. "Revisiting inequalities in the commuting burden: Institutional constraints and job-housing relationships in Beijing," Journal of Transport Geography, Elsevier, vol. 71(C), pages 58-71.
    15. Princess Makhosazan Dastile & Prisca Simbanegavi, 2022. "Adapting Netherlands 'Starterslening' Model To Improve The Current Finance Linked Individual Subsidy Scheme In South Africa," AfRES 2022-055, African Real Estate Society (AfRES).
    16. Chen, Jie & Wu, Fulong, 2022. "Housing and land financialization under the state ownership of land in China," Land Use Policy, Elsevier, vol. 112(C).

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