Housing Industrialization in Chongqing China by benbenzhou


									           Housing Industrialization in Chongqing, China


Y.H. Pan, Francis Wong, and Eddie Hui,

Department of Building and Real Estate, The Hong Kong Polytechnic University
Hong Kong, China

Rodney Howes

Construction Industry Council, United Kingdom


In recent years the housing industry has thrived in Chongqing, China. Living space of
10.77 square metres per capita was provided in 2000 and this figure increased to 15.52
square metres per capita by 2001. However, housing development in Chongqing is not
without problems. The main difficulty in Chongqing’s housing market has been a
mismatch between supply and demand at different housing market levels, which is due to
overwhelming housing demand and poor affordability. Sustainability is the primary trend
of the local housing industry. To ease the pressure on the population, ecological
environment, resources and environment, housing industrialization is one of the feasible
options for Chongqing.

This paper is based on a literature review and field research to collect primary data that is
currently in progress. The paper analyzes existing problems, as well as confronting
challenges and opportunities for the development of the Chongqing’s housing industry,
and it summarizes the manner in which to promote housing industrialization. It examines
the viability of the development of industrialized housing in Chongqing with a special
emphasis on localization, whereby full advantage can be taken by use of local resources.
Particular emphasis is given to the establishment of a framework for the advancement of
housing industrialization that expedites the development of housing technology, thereby
improving housing contribution to science and technology.


Industrialized housing, building components, material, technology, Chongqing, China

Problems with the development of the housing industry in China

Technological background

 There are many limitations in the housing industry in China. The main problems
including high material consumption, high energy consumption, low productivity and low
contribution rate of science and technology advancement. Energy consumption is 3 to 4
times that of developed countries, and labour productivity is just 1/5 to 1/6 using the
same comparison. The contribution rate of technology and science advancement of the
housing industry is only 31.4%, as compared to 60% to 80% in developed countries
(Shen, 2002).

The term ‘developing countries’ is referred to by the World Bank as “Lower-Middle
Income Countries”, and these nations are defined with a per capita annual gross domestic
product (GDP) of between $750 and $2,995 (U.S.). The World Bank distinguishes this
group from what it calls “Upper-Middle Income Countries”. Less developed countries
comprise about half of all developing countries. The least developed countries were
defined by the UN with per capita annual GDPs of $800 (U.S.) or less (Moore and
Pubantz, 2002). Developed countries were defined with per capita annual GDPs of
$3,000 (U.S.) or over (Table 1 and Table 2).

Table 1: Estimates of per Capita Gross Domestic Product in US Dollars by major area, region and

  Major area,                             (US Dollars / per capita)
  region and        1990         1995       1996         1997          1998         1999
     World          4,320       5,150       5,220        5,130         5,040        5,140

  Developed        21,050       27,180      27,150       26,490       26,650       27,820
  Developing         980        1,130       1,410        1,450         1,370        1,360
    China           337          585         679          740          783          801
  Hong Kong        13,110       22,423      24,311       26,407       24,629       23,574
    Japan          24,042       40,944      36,553       33,384       30,101       34,276
     US            22,572       27,306      28,532       30,066       31,449       32,938
    France         21,431       26,714      26,625       23,994       24,601       24,267
   Germany           --         30,103      29,109       25,788       26,218       25,479
     UK            17,158       19,226      20,063       22,361       23,854       24,336

Source: UN (1999), National accounts statistics: Analysis of main aggregates, 1998~1999, United
Nations Publication, PP9~12.

Table 2: Annual average rate of growth of Gross Domestic Product by major area, region and

   Major area,     Average rates of growth            Annual rate of change (percentage)
   region and
     country       1980~1989     1990~1999     1994     1995    1996    1997    1998       1999
     World             2.9           2.5       2.7       2.6     3.4     3.6     2.2       2.9

   Developed           2.8           2.3       2.9       2.4     3.0     3.2     2.5       2.6
   Developing          3.5           4.5       5.8       5.1     5.9     5.3     1.8       3.7
     China             9.7           9.7       12.6      10.5    9.6     8.8     7.8       7.1
   Hong Kong           7.2           3.7       5.4       3.9     4.5     5.0    -5.3       3.2
     Japan             3.8           1.6        0.6       1.5    5.0     1.6    -2.5       0.2
      US               3.0           3.0       4.1       2.7     3.6     4.5     4.4       3.6
     France            2.2           1.7        2.0       1.7    1.1     1.9     3.1       2.9
    Germany             --           1.4        2.3       1.7    0.8     1.4     2.1       1.6
      UK               2.4           1.9       4.4        2.8    2.6     3.5     2.6       2.2

Source: UN (1999), National accounts statistics: Analysis of main aggregates, 1998~1999, United
Nations Publication, PP101~104.

The development of housing technology in China is mainly characterized by the
application of traditional construction methods rather than the development of innovative
construction technology. Integrated building systems have not been established. The
concepts associated with system building that utilize modular coordination; integrated
design and standardization have not been developed for housing, although there is some
evidence of these techniques being applied to commercial and industrial buildings using
foreign imported technology.

Housing in China is predominantly provided by the construction of high rise apartments
using on site production of reinforced concrete frames and walls, together with masonry
load bearing and non-load bearing walls. Components and materials are produced locally
where possible for delivery and installation on site. The lack of modular incorporation for
housing components production hinders the form of housing standardization and general
housing component system in China.

Institutional background

The working mechanism for advancing housing industrialization is not yet established,
including a general decision mechanism and efficient working procedures, and there are
insufficient specific goals, steps and measures. Current development for housing
industrialization focuses on demonstration housing and trial projects. However the
technology required and the supply chain for driving forward housing development have
not been formed.

There is a general lack of economic and technical measures for developing industrialized
housing, together with the necessary components system and technical supporting
system, and the positive force for advancing housing industrialization is not stimulated.
The market stimulating mechanism for self-development, self-renovation and self-
perfection is not well established.

Initial research indicates a lack of research in housing investment and policies, housing
industrialization, and key housing techniques, intended to accelerate the pace of
modernization for the housing industry and to meet the future demands for residential
housing development in China. Given the current state of housing development in China,
Li has proposed an industrialized housing model as shown in Figure 1. Key to the success
of this model is the need to generate adequate demand for industrialized housing by
convincing potential home owners that it offers homes of good quality and value. In order
to achieve this objective it will be necessary to develop a house building system that
incorporates sufficient and adequate new construction science and technology. This will
not be an easy task given the traditional nature of the Chongqing construction industry
and its supply chain, which is further complicated by a general lack of knowledge and
expertise in advanced construction methods. Previous research has indicated that
investment should be made in research and development to create new manufacturing
processes based on integration and standardization of components, utilizing where
possible existing facilities and expertise from other industries such as steel manufacturing
and ship building. To accelerate the development of industrialized buildings there will
need to be adequate performance testing of new components and assemblies. Prototypes
will play a key role in refining design and improving performance from which
specifications and standards can be derived. Only when the design for the whole system
is approaching finalisation should attention be given to the implementation of a
demonstration project that will scale up the system to a full project.

                                       Government policy
                                                                   Objectives of Housing Industrialization

                                Advantage         Guarantee                         Housing Construction
                     Provide Support            Implement Demonstration
   Housing Finance                                                               Integration of Housing
                                                                                 Production and Management
                                Housing Industrialized Group
   Market Demand
                                                                                 Housing Cooperation
                       Provide Guide              Implement housing              Service Socialization
                         Base Key                   Cognizance System

                                    Technology Advancement                          Housing

                                           Housing Industrialization

      Figure 1: Development of Housing Industrialization
      Source: Li, (2002), Modern Housing Management, P35 (2002)

Chongqing as a key city in Western China

Chongqing, which is located in the southwest part of China, in the upper stream of the
Yangtze River, and it is one of the four municipalities under direct control of the Central
Government. It occupies the largest area and the largest population among all the four
municipalities in China. Covering an area of 82,400 square kilometres, and governing 14
districts, 26 counties (towns), it owns a population of 30,970,000, including 10,750,000
living in the town and 20,220,000 living in the countryside. The central area is a
peninsula, located at the confluence of the Yangtze River and the Jialing River. In the
midst of China’s economic development and its western development, Chongqing plays
an important and strategic role as it has the characteristics of the co-existence of big city
and big countryside, industry and agriculture.

The current favourable economic situation lays a good foundation for the development of
Chongqing’s housing market. Nowadays, the housing market is very active, which can be
shown mainly in four different ways: (1) a strong record growth of GDP. In the recent
years, the average growth rate of GDP in Chongqing has been 9 percent, which was
higher than the national average level and was the highest among the western provinces.
(2) The strong increasing trend of investment, (3) the improvement of financial situation,
and (4) the improvement of peoples’ general living conditions.

The strong demand for housing in Chongqing tripled the available total residential area
between 1996 and 2001 and the floor space per capita has risen from 6.94 to 15.52 sq. m.
(Table 3).

  Table 3: Building Construction and Housing Conditions in Chongqing (1996 to 2001)
             Item              1996       1997       1998       1999      2000        2001

    Population Density of
       Urban Districts          613        623       628        633        659          --

       (persons/sq. km)

    Year-end Total Floor
     Space of Buildings       13,967     16,537     19,539     18,564    20,297       21,510

        (10 000 sq. m)

       Year-end Total
    Residential Floor Area     6,556      8,785      9,777     10,669    11,820       13,127

        (10 000 sq. m)

    Managed by Housing
   Management Institutions       624         824       845        725       678         --

        (10 000 sq. m)

       Private Housing          1,351       3,623      4,692      4,149    5,877      8,096
        (10 000 sq. m)

  Year-end Residential Area     3,377       4,446      4,975      5,524    6,120      9,806
        (10 000 sq. m)

    Per Capita Residential       6.94       8.52       9.16       9.95     10.77      15.52
         Area (sq. m)

  Source: Chongqing Statistical Yearbook, 2001, p.300 and Chongqing Statistical Yearbook,
  2002, p.215.

Present situation of the real estate sector in Chongqing

Real estate development has increased since Chongqing became one of the cities directly
under the control of the central government five years ago. Its total accomplished
investment in real estate accounted for 24.69% of the total fix asset investment in 2002
(Table 4).

Table 4: Real Estate Development in Chongqing (in 2002)

                         Item                             2002       Increased percent (%)

1. Housing investment                                     14.32             17.4%
  (1,000,000,000 billion RMB)
2.Construction floor area of real estate development      44.15             20.8%
  (1,000,000 million sq.m)
  2.1 Housing area                                        34.21             23.3%
  (1,000,000 million sq.m)
  2.2 Others                                              9.94                ---
  (1,000,000 million sq.m)
3.The newly-started area                                  17.10             2.66%
  (1,000,000 sq.m)
4.Total accomplished area                                 13.91             36.3%
  (1,000,000 sq.m)
  4.1 Housing accomplished area                           11.67            36.79%
  (1,000,000 sq.m)
  4.2 Others                                              2.24                ---
  (1,000,000 sq.m)
Source: Yang (2003).

Table 5 shows that sales of commodity building in Chongqing. The sum of real estate
sale in Chongqing increased by 6.29 times than that of 1996.

Table 5: Sale of Commodity Building in Chongqing (in 2002)

                     Item                           2002     Yield of year increase (%)

1. Area of commodity building sold                 10.17              36.3 %
   (1,000,000 sq.m)
   1.1 Area of housing sold                         9.61              32.87%
   (1,000,000 sq.m)
   1.2 Others                                       0.56                ---
   (1,000,000 sq.m)
2. Sum of commodity building sold                  15.82              46.9 %
   (billion RMB)
   2.1 Sum of Housing sold                         11.92              52.23%
   (billion RMB)
   2.2 Others                                       3.90                ---
   (billion RMB)
3. Area of commodity building pre-sold              5.68              79.2%
   (1,000,000 sq.m)
   3.1 Area of housing pre-sold                     5.42              24.17%
   (1,000,000 sq.m)
   3.2 Others                                       0.26                ---
   (1,000,000 sq.m)
4. Finished Sum of commodity building pre-sold      4.58              43.34%
  (billion RMB)
Source: Yang (2003).

The above data shows that real estate investment has kept pace with the level of
economic development in Chongqing. Real estate is the most dynamic part in the
framework of fixed asset investment and it is becoming one of the supporting industries
in Chongqing.

Expectation of housing industrialization

Urbanisation and rapid growth of national economy has resulted in tremendous housing
demand. According to the UN statistics for more than 70 nations, housing
industrialization will enter a fast development period when GNP reaches 600 to 800 US
Dollars (Table 6). In 2001, China’s GNP was at 903 US Dollars pre capita (Shen, 2002).

Table 6: The relation of per capita GNP and the process of housing industrialization development

         Per Capita GNP (US Dollar)                  The process of housing industrialization
                  200 to 300                                      Initial period

                  600 to 800                                Fast development period

                 about 1,300                             Steady fast development period

               8,000 to 10,000                             Steady development period

Source: Shen, J.Z. (2002), Present state and prospects of China housing industry development,
Housing Science, 2002, Vol.11, p.4.

After entry to the World Trade Organization (WTO), which contributes to the better
economic and market environment, China’s housing industry has more development
potential. It is believed that the input of advanced housing industrialization techniques,
design ideas and managerial ideas will speed-up the development of basic housing

Demand on the housing industry

The process of urbanization is accelerating. By now, the urbanization rate has reached
33%, 4% lower than the national average (37%). Local government has decided to
increase the urbanization rate to 50% by 2010. This means that there will be
approximately 450,000 to 500,000 peasants entering the expanding boundary of the city
each year. Assuming 20 square metres floor space is needed per person, the 5 million
people will need 0.1 billion square metres. If it takes one year to build 10 million square
metres, it will take ten years to build 0.1 billion square metres as the basic dwelling space
required by the city.

The improvement of housing conditions also leads to an increase in residential housing
demand. Although there are 2,500 square kilometers of land in the urban area, only 700
square kilometres can be used for residential development because of topographical
reasons. In the next 10 to 20 years, the main city of Chongqing will be developing
rapidly, which means a vast growth in Chongqing’s housing market. People in Chongqing
need all kinds of buildings, including office building, commercial, residential, and other
buildings. This growth will create huge demand for building construction especially that
required for housing. A further requirement is to rebuild the old city. Several million
square metres needed to be demolished. According to local policy for urban renewal,
pulling down 1 square metre requires rebuilding 3.5 to 4 square metres, which translates
into more than ten million square metres of floor space (Huang, 2002).

From the above it can be seen that Chongqing needs to build at least 0.15 billion square
metres in the next decade. At current levels of production, demand will far exceed supply

(Huang, 2002).

Present problems of housing production in Chongqing

Traditional construction techniques are still being used in housing construction.
Compared with the other three municipalities in China, labour productivity of
construction enterprises in Chongqing is lower than the average national level (Table 7),
and much lower than those in Beijing, Tianjin and Shanghai (Figure 2).

Table 7: Labour Productivity of Construction in four cities of China in 2000
                                                                  (unit-yuan per capita)
           Region              Overall Labour Productivity in Term of Added-Value
           China                                       15,929
           Beijing                                     22,553
           Tianjin                                     21,765
          Shanghai                                     24,375
         Chongqing                                     12,859

Figure 2: Labour Productivity of Construction in four cities of China in 2000

                         a           g
                                               in         ai          ing
                     Ch        i ji n                   gh         gq
                             Be          Tia          an         on
                                                    Sh         Ch

Source: China Statistical Year Book (2001), Compiled by Bureau of Statistics of China, China
Statistics Press. P494.

The term “Value-added of Construction” being referred by National Bureau of Statistics
of China is defined as the final result of the activities of production and management of
construction in monetary terms in the reference period. At present, the value-added of
construction is calculated using the income approach. In other words, it is the sum of
income of various production factors in the production process (China Statistical Year
Book, 2001).

The skills of construction employees in Chongqing are relatively low because a large
number of construction workers in Chongqing are from rural areas. Many construction
workers have received no formal training and are initially employed cheaply from the
rural area. Until the end of 2000, the total number of construction workers was 731,600
persons, of which, 70% were farmers (Wong and Hui, 2001). There is a large difference
compared with the other three cities, as shown in Figure 3.

Figure 3: Number of Staff and Workers in Construction Enterprises by Registration Status in four
cities of China in 2000 (unit-10 000 persons)

                         g                              i
                   i ji n         nj i
                                                      ha         ing
                 Be            Tia                  ng        gq
                                                 ha         on
                                                S         Ch

Source: China Statistical Year Book (2001), Compiled by Bureau of Statistics of China, China
Statistics Press. P474.

The consumption of construction materials of construction enterprises, as shown in
Figure 4. The manufacture of traditional building materials in Chongqing is limited and
contractors find it necessary to ship in 80% of materials from other provinces. The
Construction Commission is currently investigating ways in which the production of
local materials can be boosted up to 50% (Wong and Hui, 2001).

Figure 4: Consumption of Main Construction Materials of Construction enterprises in four cities
of China in 2000 (Value of Material, unit-10 000 yuan)

                           g                n                  i               ng
                       ijin             nji                 ha            qi
                  Be             Ti
                                    a                  ng               ng
                                                 S   ha              ho

Source: China Statistical Year Book (2001), Compiled by Bureau of Statistics of China, China
Statistics Press. P498.

Last year, there was rapid development in materials used to decorate buildings and
homes. However, the introduction of new construction materials was low and a large
proportion of existing materials did not have a fixed specification. There was little
evidence of innovation and research in the development of new materials and
construction processes. A major problem is poor standardization and there are no perfect
standards for new technology and materials. The only efficient way to lower construction
cost is to strengthen technical innovation and technological revolution, as well as to
strengthen the industrialization and to standardized production.

Previous research for the development of industrialized housing in

Previous studies (Wong, 2001; Li, 2001; and Howes, 2001) have identified Chongqing to
be strategically important to opening up the development of Western China. The self

governing municipality has been identified as a sufficiently large market for
industrialized housing, provided that the local population can be convinced that it offers
quality and value for money. Additional pressure has been imposed on demand due to the
need to re-house those families disposed by the impounding of the Three Gorges dam and
the continued migration to the urban area of people from the surrounding countryside.

Since these studies were undertaken, Chongqing has grown economically by 9% per
annum, but despite this the additional wealth created and the science and technology base
of the construction industry has not changed. Construction in Chongqing is mainly of a
traditional nature and there are major skill shortages resulting in poor quality
workmanship and the inability to meet housing demand. Construction materials are still
imported from surrounding regions and elsewhere in China and technology transfer from
other industries remains low. Previous research recommended a multi-faceted
incremental approach to industrialized housing by encouraging innovative design based
on an appraisal of existing industrialized housing systems worldwide. The design would
incorporate locally produced materials, especially those that could be created from waste
products and agricultural byproducts such as bamboo and rice paper. The research also
recommended investment in the local steel and shipbuilding industries to produce
lightweight cold rolled steel frames that could be used as the structure upon which,
roofing, cladding and floors could be supported. Innovation was also encouraged using
modularization and the use of composite panels, and service looms that would provide
sustainable and high performance life cycle solutions. To date none of these
recommendations have been acted upon.

Demonstration projects for Ministry of Construction in Chongqing

The objective of having national comfortable housing demonstration project is to
promote housing industrialization; to drive the application of new material, new
equipment and new technology. There are two comfortable housing demonstration
projects in Chongqing, including Hui Long-Wan Residential Property, and Feng Ming-
Shang Zhuang Residential Property. The aim of these projects is to demonstrate the
latest developments housing design, construction level and dwelling quantity. These
projects are essentially rationalized and improved versions of traditional construction
projects, which provide incremental improvement rather than breakthrough in
construction science and technology. This represents a safe approach, in that the
improvements are based on designs that are known to work and are within the capability
of designers and constructors. Therefore they do not comply with the radical approach
necessary to significantly increase production, improve affordability, quality and value
for money.

Safeguarding the integrity of industrialized housing

The application of industrialized housing in the United States, Europe and Japan has a
history of failures and successes. This historical knowledge base, together with

technology transfer from other industries forms the basis of today’s industrialized
housing systems that conform to high standards of design and performance. Standards
and codes have been developed that safeguard structural stability, enclosure, thermal
insulation and the internal building environment as well as life cycle performance.

The task of designing and manufacturing a housing system from scratch is a major task,
since all building elements and components will need to perform in an integrated manner
to cope with the environment and wear from users. Untested materials and components
are likely to fail and this will impact through the building minimised by the ingress of
moisture, salts and atmospheric pollution. It is therefore necessary to invest heavily in
research and development programmes that incorporate extensive testing of prototypes
intended to further develop designs where the risk of failure is reduced. Lessons gained
from industrialized building projects undertaken worldwide point to the importance of
providing building elements and components that require low maintenance and have
good longevity that requires only minimal replacement during the lifecycle.

Objectives for the future production of housing in Chongqing

If an integrated housing system is to be established in Chongqing that includes both the
housing industry and other industries, then it will be necessary to increase the average
annual completion area per person from 20 square metres to 30 square metres, and to
increase the science devotion rate of housing development from 25.4% to 35%, and the
industrialization rate from 15% to 30% (Li, 2001). This will require change from
traditional large scale production on site to fabrication and off site assembly so as to
improve productivity and quality. In turn this will require new expertise and skills, which
should be expressed in an integrated supply chain utilizing new technologies and
standardized components.

The new industrialized housing systems selected will need to achieve the criterions of
adaptation, function, safety, durability, environment and economy. Further housing
development must embody the ideas of humanity and sustainability.

Key issues for industrialized housing in Chongqing
The introduction of industrialized housing in Chongqing will require the following issues
to be addressed in this research program:

(1) The establishment of a housing system that is suitable for industrialization according
to local conditions in Chongqing. This should incorporate an index such as structure type,
size and height.
(2) The establishment of standards and specifications.
(3) The development of new technology for the production of building materials.
(4) Technology transfer from other related industries and the establishment of new
production line technologies.
(5) The material supply chain.
(6) The establishment of industrialized housing sector.


To sum up, Chongqing is the key city in Western China, and it is in a favorable economic
situation to lay a good foundation for the development of its housing industrialization.
Currently, the housing market is very active, but problems exist with the development of
Chongqing’s housing industry, which include poor design concept, primitive technology,
low management level, few new materials and production methods and poor
standardization. Given these circumstances it is difficult to see how a system of
industrialized housing can be developed locally according to a short timescale without
intervention from expertise elsewhere in China and more importantly from foreign
sources. A pre-requisite for successful adoption of new technology in Chongqing is the
provision of proper education and on-the-job training to the existing local workforce.
Also, incentives should be given by the local government to housing developers, such as
an increase in development plot ratio, in order to encourage the use of industrialized
methods for housing production.

It is urgent to boost the development of housing industrialization and to expeditiously
meet the demand of the housing market. To conclude, this paper has met with its
objectives and the next stage of this research will focus on analyzing the various options
capable for developing economic and viable industrialized housing solutions in
Chongqing. This will include promoting the general quality of houses, economies of scale
and reducing production costs. The research will also look at the necessary adjustments to
the industry’s structure, changes to construction methods and the full utilization of local
resources to realize the objectives of industrialized housing. Restructuring of the related
industries will also be included in the final analysis.


This study is funded by the Research Grants Council in Hong Kong (Project No. B-Q

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