Managing overaccumulation: China’s new affordable rental housing programme and its financialization through REITs

Abstract

Social housing has been experiencing a global trend toward residualization, primarilytargeting vulnerable groups through non-market methods. Meanwhile, it is undergoinga parallel trend of financialization, where it is increasingly treated as a financial assetfor trading and speculation. In contrast, social rented housing in China is transitioningto a mass model and embracing financialization, exemplified by the government'sproactive promotion of the Affordable Rental Housing (ARH) program and theintroduction of Real Estate Investment Trusts (REITs) for social housing investment.However, the combination of seemingly non-profit social housing with profit-drivenREITs remains an understudied phenomenon. This paper addresses this gap by drawingon theories of overaccumulation and state entrepreneurialism. We explore the rationalesdriving the promotion of ARH (-REITs) and investigate the state's role in facilitatingthis process. We argue that China's development and financialization of ARH isincreasingly adopted as a national strategy to mitigate the overaccumulation crisis inthe homeownership sector through a 'spatial fix' wherein capital circulates within thesecondary circuit rather than switches between circuits of capital. This strategy involvesestablishing legal frameworks and institutions to make ARH profitable, stimulatingdemand by expanding target groups to include middle- to high-income “talents” withadditional benefits, stimulating supply by reducing costs and political directives, andpromoting financial innovation and credit enhancement. We conclude with concernsabout the potential long-term ‘crisis-magnifying’ effects of this spatial fix and itsimplications for vulnerable households.