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

Social housing has been experiencing a global trend towards residualization, primarily targeting vulnerable groups through non-market methods. Meanwhile, it is undergoing a parallel trend of financialization, where it is increasingly treated as a financial asset for trading and speculation. In contrast, social rented housing in China is transitioning to a mass model and embracing financialization, exemplified by the government’s proactive promotion of the Affordable Rental Housing (ARH) programme and the introduction of Real Estate Investment Trusts (REITs) for social housing investment. However, the combination of seemingly non-profit social housing with profit-driven REITs remains an understudied phenomenon. This paper addresses this gap by drawing on theories of overaccumulation and state entrepreneurialism. We explore the rationales driving the promotion of ARH and ARH-REITs and investigate the state’s role in facilitating this process. We argue that China’s development and financialization of ARH is increasingly adopted as a national strategy to mitigate the overaccumulation crisis in the homeownership sector through a ‘spatial fix’ wherein capital circulates within the secondary circuit rather than switches between circuits of capital. This strategy involves establishing legal frameworks and institutions to make ARH profitable, stimulating demand by expanding target groups to include middle- to high-income ‘talents’ with additional benefits, stimulating supply by reducing costs and political directives, and promoting financial innovation and credit enhancement. We conclude with concerns about the potential long-term ‘crisis-magnifying’ effects of this spatial fix and its implications for vulnerable households.