The Applicability of the Housing Voucher Program in China’s city of Guangzhou

6 min readJan 4, 2021

Background

Guangzhou, the third most developed city (after Beijing and Shanghai), has a population of over 13 million. It was historically known as a manufacturing nirvana and a major origin of “Made in China” products. While Guangzhou obtained the fastest GDP growth rate of 13.7% among all cities in China in 2019, it has been seriously challenged by the “modernization problems” including income inequality and the emergence of “urban poor.” (World Bank, 2011).

Guangdong’s Urban Village (Photograph by That’s)

The new “urban poor” have two typical profiles - urban residents laid off during the state’s industrial restructuring and rural migrants. (Wang, 2012) In the past four decades, more than 18 million farmers are recorded to have moved to the city of Guangzhou. These migrants are concentrated in what are called the villages in the city (ViCs). (Lin & De Meulder, 2012) Geographically, unlike the urban slums in the US or Europe, these Chinese ViCs commonly occupy precious areas that are not far from city centers. As of 2016, there were 139 ViCs in Guangzhou, accommodating near 70% of the rural migrants. (Cai, 2016) Despite having a vibrant neighborhood culture, the ViCs are reported to be “dirty,” “chaotic,” and packed with “substandard buildings.” (World Bank, 2011; Li & Wu, 2013)

Meanwhile, the “urban underclass” is institutionally marginalized due to China’s rural-urban dualism system. When it comes to housing, the Chinese government subsidizes or imposes price ceilings for the two types of housing: lianzufang (cheap rental house) and jingjishiyongfang (affordable house). (Yuan&Wu,2013) However, the hukou (household registration) system prevents those without the city residency from accessing housing subsidies, as well as the sponsorship for healthcare and education. (Lin & De Meulder, 2012; Wu, 2012; Chung, 2017)

Housing Voucher Program (HVP)

Among the policies for tackling urban poverty, the HVP has drawn attention for its innovativeness and the mixed results. In a nutshell, the HVP provides low-income households randomized opportunities to move to wealthier neighborhoods through obtaining housing vouchers. It has witnessed successes in the US, where low-income families with below-13-years-old children at the time of reallocation reported a noticeable earning increase. However, a similar program in India resulted in a high program dropout rate and failed to improve the treatment group’s economic status significantly. Would HVP work in the Chinese city of Guangzhou?

Applicability of HVP

First of all, HVP relies on the assumption that low-income individuals are willing to move. However, the ViCs dwellers in Guangzhou tend to show a relatively strong willingness to stay in their neighborhoods. (Wu, 2012)

Except for the low rental prices, the pull factors include commuting time to work and the strong village social network, whereas neighborhood quality does not appear to be a major concern. (Yi, 2014)

Meanwhile, the fear of exclusion contributes to the hindering factor. It is important to recognize that the rural migrants congregate with their relatives, friends, and fellow-villagers to whom they turn to borrow money, get job referrals, and navigate the city. (Wu, 2012) Trust and relationships play a crucial role in Chinese society, and the laoxiang (township) networks are fundamental to the

migrant groups’ survival. Hence, the uptake rate could be low if HVP is implemented.

Moreover, even if the low-income ViC dwellers moved to the high-income area, education and healthcare subsidies are still beyond their reach without an urban hukou. Essentially, the question is about the constraints for the urban poor to escape the poverty trap. Is it the proximity to amenities or the exposure to the wealthier communities? Or is it the institutional barrier such as the hukou system that excludes the rural migrants from critical social welfare?

Alternative: Recognize the Strength of Vertical Villages and Promote Self-Driven Integration

Each ViCs have its own ecological and social fabric. Above all, the Guangdong government must recognize the dynamic village culture and the strength of social capital accumulated for centuries and respect the residents’ willingness to stay.

Based on respect, the need for urban redevelopment can be met through innovative self-driven integration programs. With the fall of village houses, the villagers circulating information within the close-knit community are prone to move in the same residential building, creating the phenomenon of “vertical villages.” The government could consider encouraging the building managers and cunwei (residents’ committees) — who are in charge of managing the village affairs — to design villagers reconnection programs. For instance, each vertical village could form self-help organizations facilitated by the cunwei to organize career fairs, find residents from the same origin, and join labor unions. The building manager could announce and manage the activities through WeChat, a Facebook equivalent in China that is popular among rural migrants.

Additionally, the government should promote opportunities for new rural migrants to interact with urban residents without reallocating. The integration program could include encouraging migrant families to send their children to attend K12 and primary school in higher-income neighborhoods, with the transportation subsidized. Considering the public primary school is free in China, the subsidy for commuting could easily be compensated by the increase in tax revenue generated in the labor-intensive industries, which benefit from the migrant workers’ labor input.

Last but not least, the government cannot ignore the perennial institutional barrier faced by the ViC dwellers due to the lack of local hukou. The policy reform aiming to level the playing field for rural migrants to enjoy employment benefits and housing subsidy must be continued. Considering the limited capacity for urban Guangzhou to absorb additional migrants, the policy innovation should expand to improving rural upward-moving opportunities through programs like advanced farming skills training to boost rustic attractiveness and contain the influx of rural migrants.

Call to Action

In 2017, the “Greater Bay Area” plan meant for China’s eleven southern cities — including Guangzhou, Hong Kong, and Macau — to build synergized economic strength that can rival Silicon Valley. The plan set out a timeline for the rapid urbanization, which include the demolition of the ViCs. In large villages such as Chentian, more than 100,000 residents will face resettlement due to the urban redevelopment projects. (South China Morning Post, 2019)

With the demise of the ViCs, maintaining the migrants’ social support network is crucial. However, policies like HVP could disrupt the community primary to rural migrants’ survival and social coherence. Instead, the government should recognize vertical villages and encourage self-help organizations to share resources based on trust. In the long run, removing hukou barriers and regulating rural-urban migration is still the most critical step for China and, especially, the migrant city like Guangzhou to take in order to guarantee a decent living standard for the urban poor.

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