Beijing's introduction of public rental housing will add a much-needed new choice to the underdeveloped public housing sector.

Starting from Saturday, low-income local residents can apply to receive government subsidies to rent public housing at market prices.

If properly administered, public rental housing will enable the municipal government to better meet the housing needs of most low-income families while helping allay the recent panic about soaring home prices in the market.

Compared with most of the other measures to soften soaring housing prices, the new approach of increasing the affordable housing supply with government funds appears not only more innocuous in the sense of maintaining market stability but also more effective in ensuring sound development of the property sector.

If Beijing can swiftly and sufficiently boost the supply of public rental housing, other local governments should follow suit as soon as possible.

The latest statistics show that property sales nationwide in June rose 32 percent by floor space and 53 percent by value from a year earlier. And new home prices in 36 medium- to large-sized cities rose 6.3 percent in June from a year earlier.

As the return of a new and bigger housing bubble looks imminent in some major cities, Chinese policymakers have become distinctly ambivalent about the housing boom.

On one hand, a vibrant real estate market is what the country needs to cushion the national economy against the worst global slump in many decades. Fueled by the unprecedented credit supply, the new housing boom has contributed to steering the country back on track.

On the other hand, when housing prices rocket through the roof as they did just two years ago, Chinese policymakers cannot help but worry about the dire consequence of unchecked property bubbles. The higher house prices go, the less people can afford. It could lead to the housing bubble popping sooner and possibly to a more severe aftermath.

Chinese policymakers have recently tightened requirements on mortgages for second-home buyers to show that they are serious about the possible financial risks of housing bubbles.

Yet, given the country's need to encourage spending by easing monetary controls until the recovery is firmly established, it is hard to imagine that credit support for the property market will be withdrawn any time soon and thus stop the surge of home prices.

But the fact that policymakers can do little to prevent the increase of liquidity to further stoke demand for houses does not mean local governments are short of tools to increase the supply of affordable housing.

An underdeveloped public housing system has long wrongfully accelerated the hike of housing prices by depriving low-income families of government-subsidized housing.

Now, the Beijing municipal government has just displayed what it can do. Other local governments should assume their part on public housing too.

(China Daily August 2, 2009)