From Chinese Press

High housing prices erode benefits of China's security net

(Xinhua)
Updated: 2010-06-29 14:14

For three years, Luo Yan, 26, and her boyfriend have been saving two-thirds of their monthly income for a down payment on a home in Beijing.

But the purchase, which Luo's parents regard as essential for marriage, is proving elusive for the "double income, no home" pair.

Luo works as a teacher in a special school for the mentally handicapped and her boyfriend as a software engineer in the domestic search giant, Baidu. Their total monthly income of 15,000 yuan (2,200 US dollars) is about three times the average urban monthly income in the capital.

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China's social security net has been expanding to cover a host of contingencies for which most of the population has been used to saving doggedly.

Pension schemes have been expanding so that old age is less of a concern, while the spread of health insurance coverage means much of the population no longer fear the financial burden incurred by a sudden illness or injury.

Most of China's urban households are already covered by pension and basic medical insurance schemes, and the government is gradually rolling out coverage to the country's 900 million rural residents.

But those gains are being rapidly negated as the dream of getting married and raising a family in the security of their own home becomes increasingly unobtainable.

The government had hoped to boost domestic consumption to help reduce the nation's dependency on exports in the wake of the global economic downturn since late 2008.

In early June, the Ministry of Commerce extended the vehicle replacement subsidy for another half year to stimulate automobile consumption. A total of 127,000 older vehicles have been replaced since the subsidy was initiated in June last year, boosting domestic automobile spending by 15 billion yuan (2.2 billion U.S. dollars).