Ownership Society of the Proletariat

One big puzzle in China’s market reform is how the government maintained popular support during the rapid socioeconomic transformation. This article argues that while the market transition aggravated economic inequality, the housing privatization reform of the late 1990s, in which public housing was sold at deeply discounted prices, provided a much-needed welfare benefit to the urban residents before a functioning welfare system was established. Using survey data collected in Beijing during the period of housing privatization reform, this study finds that urban residents who purchased public housing reported higher evaluations of China’s market reform and were more satisfied with government performance. The effect was stronger among SOE blue-collar workers, lower-income earners, and those without social insurance. Further analysis shows that the purchase of public housing had a long-lasting effect on shaping pro-market policy preferences among these former proletariats. These findings suggest that housing privatization contributed to a widely dispersed coalition that supported the government’s market-oriented policies, serving as a source of political legitimacy during the period of dramatic changes.