China’s central government wants to weaken the industry’s vice-like grip on the political system as a means to avoid a Jasmine-type revolt. Provincial and district level Chinese politicians who have reaped on the money from the galloping prices in the real estate industry has been put under duress.
Premier Wen Jiabo on Monday rolled out a 3-pronged attack on the industry, which is known to be the main supplier of bribe money and also an important source of funds for local governments. Local governments in urban and industrial areas raise a lot of funds by selling land to the industry.
Heart burning over housing prices and official corruption are seen as important causes that can trigger a political revolt. Though there has been no impact of online calls for a Middle Eastern style Jasmine Revolution, the government is extremely worried about it.
The message from the top leadership is clear. It does not want local level politicians and officials to cause social instability with their corruption and bad governance.
Wen has now tasked these local governments to reduce housing prices and plans to set targets for them to achieve in a time-bound manner. He is also forcing local governments to release land for construction of 10 million houses for low income groups in 2011 and 2012 in order to cool down the prices.
A more important challenge posed before local politicians is Wen’s threat of enhancing the scope of investigations into official corruption and closely scrutinizing the performance of local officials in reducing prices and ensuring social justice.
The Communist Party’s top leadership is due to see a change of guard in 2013 when vice president Xi Jinping is expected to succeed President Hu Jintao, with vice premier Li Kequiang taking over as premier. It does not want to take the risk of any kind of political instability at this crucial time of internal changes.
