China’s Urban Housing Problem and Underground Housing 

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Updated: Mar 28, 2022
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China’s urban housing problem is characterized by many factors. With approximately one million citizens residing underground the countries capital. It is safe to say that China has an urban housing problem. Worldwide, Beijing is the third most expensive city to live in. Additionally, the average monthly salary of persons living in the city is less than the average monthly salary. This means a lot of persons living in the city cannot afford housing. This has led to very deplorable living situations in China’s cities.

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The aim of this paper is to find the factors that have characterized China’s urban housing problem, determine how each factor has contributed to China’s urban housing problem, determine how the urban housing problem has affected the youth and migrant workers in particular. This paper will also discuss the housing problem in Beijing, with a focus on its underground population.

Research Questions

  • What are the factors that characterize China’s urban housing problem?
  • How has each of these factors contributed to the Urban housing problem overall?
  • How has this problem affected the youth and migrant workers in particular?
  • What is the underground population and what are the problems they face?

In conducting this research, findings were drawn from literature on various aspects of China’s urban housing problem. This included the Hukou system, the increasing urban population, causes for the rising urban housing prices, and the underground population. Some of the literature also focused on different groups with China’s society and how they are affected. This included literature related to the employed youth living in urban areas and migrant workers.

The Household registration system dates back to Ancient China where persons were asked to register their household based on the area in which they lived. The current Hukou system was introduced in 1958 so the government could better manage distribution of welfare, crime and internal migration. Initially,it was used to separate rural and non-rural agricultural workers. This was aimed at maintaining the rural labor force. Urban residents were however given more social benefits than rural residents. In the 1980s, the booming manufacturing sector and the need for cheap migration led to a mass migration to the major cities. These migrants live and work in China’s cities illegally. As such they are banned from certain public services, and their children may not be able to attend school. Migrant workers may request to change their permanent residence. However the chances of this are very low as they are generally capped and given out on a point based system. This means only a certain number of persons are considered, and they are usually skilled or highly educated. With the migrant workers numbering in the hundreds of millions, pressure has been placed on the government to find a solution. In response to this the government increased the number of urban Hukous being granted. In 2016, On February 11, China’s Ministry of Public Security announced that it had issued 28.9 million new urban residency permits in 2016, with 1.69 million issued in Beijing, 406,000 in Shanghai, 810,000 in Guangzhou, and 1.71 million in Shenzhen (Sheehan, 2017). The government also plans to grant 100 million urban Hukous to migrant workers by 2020 (Sheehan, 2017). This will greatly help migrant workers, as they will be able to access social services and benefits such as schooling for their children and access to subsidized housing. However, it will further complicate China’s housing problem as it will lead to a further expansion in China’s urban population.

The root cause of China’s urban housing problem is the increasing urban population. Between the years 2000 and 2016, Beijing’s population doubled (School, 2018). The preferential bias given to residents of urban and the job opportunities available in these urban cities have led to a migration of Chinese citizens from rural and less developed areas to the major cities in china. Some are moving to attend college while some are the educated from these regions hoping the register for permanent residence. Hence, migrant workers are a large portion of the urban population. According to the Chinese Labor Bulletin there are currently 277 million migrant workers in China. With the government planning to grant more urban Hukous in the future, the urban population will only increase. In some cities, the employed migrant population exceeds the number of employed persons who have permanent residence within the city. In Beijing for example, it was found that fifty-three percent of young persons who registered for permanent residence were from outside of Beijing (Li, Li & Li,244). Additionally, there has been a change in the skill level of the persons moving to cities. Traditionally, it was mainly persons in blue-collared jobs who were migrating to cities to find work. However, within the past decade more, there has been an increase in the number of managerial, professional and technical personnel. In Beijing, it was found that sixty percent of managerial personnel and fifty-six percent of professional and technical personnel’s place of registered permanent residence is not Beijing (Li, Li & Li, 245). Additional a staggering eighty-percent of these white-collared workers were not born in Beijing (Li, Li & Li, 245). All of these millions of persons who move to cities annually are looking to purchase or rent a house within the city. Blue-collared workers, in particular, are looking for affordable living conditions. Affordable living options are usually scarce in cities, but it is further compounded when there is such a great demand due to the expansion of the urban population.

Overpopulation creates a large demand for affordable housing in cities in China. However, the real-estate market has not been able to meet this demand. Hence, there is a housing shortage. In keeping with the theories of economics, this housing shortage has resulted in a sharp increase in the housing prices. According to a study done on thirty-two cities in 2018, population increase has great impact on urban housing prices. It was found that nationally, a one percent (1%) increase led to a 0.34% increase in urban housing prices. Regionally, it was found that in the east a population increase of one percent (1%) led to a 1.34% increase in urban housing prices (Lin, Ma, Zhao, Hu, & Wei 2018). The rapid increase in China’s urban population has led to sharp rise in housing prices in cities. A small apartment that includes a living room space costs as much as twelve hundred US dollars (US$ 1200). This has a large impact on living conditions of persons within cities. With high demand and a low supply, the needs of many will not be met. However, housing is a basic need and as such persons are forced to live in very poor conditions. Some are forced to rent a small abode with as many ten other persons. This is illegal. Others, may rent someone’s basement. For those living in Beijing, they rent spaces underground. The largest problem is small size and unsanitary conditions. The average work dormitory is approximately 66 square feet which is below the city limit of 107 square foot (Kim, 2014).

The youth and migrant workers are the groups most affected by the urban housing problem. The rising housing prices means the youth have to save for a longer time in order to buy a home. High housing prices means persons have to spend a large portion of their income on rent. Some young persons are generally in entry level jobs and as such they do not earn enough to pay the exorbitant cost of living in a city. This has had a negative impact on the morale of young persons within cities who feel their situation is hopeless. With limited savings, many turn to parents, relatives and commercial banks in order to fulfill their dreams of owning a house (Yapeng, 190).For migrant workers, they are considered illegal residents and as such they are not able to access the subsidized housing provided by the government. They are also banned from any government subsidies which would make living in the city cheaper. They face discrimination and segregation on a daily basis. They are commonly referred to as the “ant tribe” or “rat tribe”. They work lower wages and longer hours. Their living conditions are the worst. In fact, the average housing size for a migrant worker is 60 square foot (Soohee,112). Both groups feel their situation is hopeless and are angry at the government. This has placed pressure on the government to find solutions.

For many in Beijing, the solution is underground dwellings. It has been reported that approximately a million persons are living underground Beijing. These underground dwellings were built in the 1960s and 1970s, around the time of the cold War. The Chinese government had decided to build bomb shelters in preparation for a possible nuclear attack. In the 1980s, these shelters were sold to persons who leased them. These shelters go three stories underground. The rooms are small and there are shared common areas. Some rooms are a little over one hundred square feet. Electricity and water are provided however the air is dank. In 2010, the government declared underground dwellings as illegal dwellings. However, the cost is less than one-tenth the rent for dwellings above ground with an average cost of US$70. For many this is most important fact. For migrant workers, underground housing is their only option. The cost of living within above ground is not affordable based on their earnings. There are not many affordable housing options available housing options open to migrant workers. The subsidized housing offered by government require proof of permanent residence. In recent years, the government has opened subsidized housing to migrant workers. However, the requirements have only been met by the most educated and skilled migrant workers. Since migrant workers make up a large portion of Beijing’s population, this policy change has not been very effective as only a small percentage of migrant workers have benefitted. A recent fire which killed nineteen migrant workers has seen a mass eviction of migrant workers from Beijing. City-wide fire inspections have been carried out and many migrant workers have been displaced(The Economist,2017). However, the question of these persons will go remains and the government is expected to answer this question.


China’s urban housing problem is characterized by high housing prices, an increasing urban population, large demand for affordable housing and a housing shortage. These factors as well as the existing Hukou system have all contributed to China’s urban housing problem. The group most affected are the youth and migrant workers. The youth are faced with low morale and hopelessness as they fight to achieve their dream. The migrant workers are faced with discrimination and a system which strips them of their rights as Chinese citizens. This has resulted in persons in China’s capital being forced to live underground in deplorable conditions both underground and above ground.

This paper focuses mainly on the economic aspects of China’s urban housing problem. Future research is needed in the social aspects of China’s urban housing problem. Future research would explore the effects of the urban housing problem on access to social services, discrimination and segregation and overall morale in urban areas. Additionally, a lot of the data available were from the years 2014 and 2015. There has been some government reform since then, however, the current newspaper articles have reported little or no change due to the size of urban population.

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China’s Urban Housing Problem and Underground Housing . (2021, Oct 19). Retrieved from