Jingjing Ruan
Iowa State University
April. 20, 2015

Why is this topic?
 1. The era of deregulation
 In may 2014, the Chinese government started institutional reform and decided to cancel
133 approval authority of the central government and other ministries.
 2. Gated communities are already very common in China
 About all new housing built in China over the last 10 years is gated.
 Approaching 100% of houses built in China’s sprawling new metropolises are governed by local Neighborhood organizations
 3. The big issue is how government can better manage them or provide better service for them.
 How to balance the private government with the municipal government, Private seems to reduce the public realm, but it secures more efficient collective realms

Definition of key words
There are two kinds of communities in China, one is residential & commercial building (RC) ， the other is residential apartment (R), most of residential apartments are gated communities.
Gated community: with neighborhood walls, guards, owner-governance structures, fees and neighborhood management.
RC R

Definition of key words
Their differences between R and
RC are shown below.
Residential apartment
Residential & commercial building
Brief description
 Regulated by the Standards for Residential District Planning, has the required public goods in the community
 Right of use lasts 70 years
 Attract all citizens
 Not regulated by the Standards for Residential District Planning
 Right of use lasts 40 years
 Mixed use, usually located in commercial or quasi-residential zoning areas, typically no precincts
 Utility fee is much higher than that of R
 Attract single person, mostly used for investment or for renting

Definition of key words
Local public goods are public goods that are provided by local government and can be enjoyed only by residents in the local community: for example, local public school, public transport stations, beaches, parks, etc. are typical examples of public goods.
Club goods are privately provided public goods. They are usually provided by developers, and managed by private management companies or home-owner associations in China . These goods include convenience shops, connecting roads within the precinct, landscaped open space, small-scale sports facilities, kindergartens, primary and secondary schools, senior residents’ community centers, clinics, welfare services, playgrounds, swimming pools, parking and so on.

Research Question


As club goods and local public goods are in an urban ecosystem (Woo and Webster, 2014), we can use the biological concept to describe their relationship.
Biological concept: Mutualism (+ +), benefits both species
Antagonistic interactions (+ -), one species benefits and the other is harmed
Competition (- -; + +), using the same resource
Commensalism (+ 0) , one benefits but the other is unaffected
Amensalism (- 0), one is unaffected while the other is harmed

Research Question
Public goods
Transportation aspect aspect environmental cultural and healthy aspect commercial aspect negative aspect
Definition
Metro station, bus station, Residential street, parking space
Park, river, swimming pool, playground, mountain, square
Education, library, hospital, gym, community center
Department stores, super stores, center
CBD social aspect Police station, rescue station, urban village association
Garbage station, toilet, sewage treatment facilities, distribution substation, freight road, high tension corridor, and other dusty, noisy functions
The
Hypotheses relationship between club goods and local public goods mutualism (++)
Which is CCs more sensitive to ？
Local goods public
Commensalism(+0) amensalism (- 0) amensalism (- 0)
Competition(- - ;+ +)
Competition(- - ;+ +)
Club goods
Local goods public
Club goods
Club goods
Local goods public
Suggestion management for
Mainly supplied by
Government, working with developers
Mainly supplied by developers
Mainly supplied by
Government, working with developers
Mainly supplied by developers
Mainly supplied by developers
Mainly supplied by
Government,

Research Design
 Haizhu District in Guangzhou
 Number of gated communities: 800-1000
 Population of Haizhu District in Guangzhou:
840 thousand
 Area: 102 km²

Research Design



Select all the residential & commercial building (RC) in Haizhu district of Guangzhou, the number is 83. Then choose one nearest residential apartment (R) with every RC. The total RCs and Rs are 166.
Digitize the all communities, collect the average house price of every community from Soufang website.

 Relationship to space, to visually display public goods and club communities in space.

 Average housing price of communities.




Number of shops , hospitals, banks, subway stations, bus lines in 800 meters;
Shortest distance to the nearest school;
Shortest distance to the nearest park.

 Building age, plot ratio, Brand of builder, Housing management fee

Research Design
Categories
Policy
Structural
Variables
Housing policy
Housing Planning
Definition housing and land tax; Limited purchasing right for R,
Related to the research ownership 40y/70y, utility fee
Double-limited housing in R, limited area and limited
Excluding affordable housing, when calculating the average price of R price. Affordable housing, Public rental housing
Rs have all required club goods.
Standards for Residential District
Planning （ GB50180—93 ） (2002 ）
Area
Require basic public goods for R;
No requirement for RC
Standards for Residential District Planning defines housing regulations based on number of units.
A surrogate for quantity and range of privately provided public goods
Sales Price
Building age plot ratio tends to include investment-demand as well as usedemand,
A surrogate for quality
A surrogate for quality dummy variable for less than 10 years dummy variable for less than 3
Brand of builder
Housing management fee
A surrogate for quality and homogeneity
Be managed by qualified housing managers and to accumulate funds for long-term maintenance.
dummy variables for 20 biggest builders dummy variable for more than 2 ￥

Research Design
Categories Variables locational
Definition
Public goods transportation aspect in
Number of subway stations and bus lines in 800 meters
Public goods environmental aspect in Shortest distance to the nearest park, river, swimming pool, playground, mountain, square
Related research to the
Public goods in healthy aspect
Number of hospitals in 800 meters
Public goods commercial aspect in
Number of shops and banks in 800 meters
Public goods educational aspect in
Distance to the nearest school

Methodology
1.
2.
Collect all the data for these residential & commercial buildings and residential apartments, which includes sales price, building age, plot ratio, brand of builder, housing management fee, public goods, club goods.

Methodology
1.
2.
Digitize the area of all the residential communities. Then join attributions from the previous table, such as plot ratio, green ratio, building structure and the bland of the housing estate.
Distribution of communities (include residential & commercial buildings and residential apartments)

Methodology
1.
2.
Create 800 meters buffer for each communities. Select all the public goods in the buffers, and calculate the number of hospitals, banks and so on for each buffer.
800 meters buffer for each communities

Methodology
1.
2.
Digitize all the schools in
Haizhu district, and classify them into club goods and local public goods.
Distribution of schools in gated communities
Distribution of local schools

Methodology
1.
2.
Digitize all the parks in
Haizhu district, and classify them into club goods and local public goods.
Distribution of parks in gated communities
Distribution of local parks

Methodology
1.
2.
According to the research design, import the number of public facilities calculated in the buffer to the attribute table. Then export the layer and all the data into a shape file.

Methodology
1.
6. Use Geoda to do spatial regression
 GeoDa consists of an interactive environment that combines maps with statistical graphics, considering spatial data in the regression. It is widely used in economic analysis.
 First of all, create new project from the shape file which contains the spatial information, and then add an attribute table in a .dbf format which contains the statistical information. The attribute table can be edited inside GeoDa. At last, create distance-based spatial weight to do spatial regression. GeoDa can produce histograms, box plots, and scatterplots to conduct simple exploratory analyses of the data.

Methodology
1.
2.
3.
The empirical Model is: ln(P) =
α
0
+ α
1 ln(N_SHOP) +
α
2 ln(N_BANK) +
α
3 ln(N_HOSPITAL) +
α
4 ln(N_STATION) +
β
1
T +
β
2
T*DIST_SCHOOL+
β
3
T*DIST_PARK +
λ k
+
ε
4.
Where:
1.
2.
3.
4.
5.
6.
7.
8.
P = real property price in RMB (obtained by deflating nominal transaction prices);
N_SHOP = the number of shops in 800 meters;
N_BANK = the number of banks in 800 meters;
N_HOSPITAL = the number of hospitals in 800 meters;
N_STATION = the number of bus stations and subway stations in 800 meters;
T = an event dummy variable that equals 1 if the public goods are club goods and 0 otherwise;
N_SCHOOL = the number of schools in 800 meters;
N_PARK = the number of parks in 800 meters;
9.
DIST = distance from the community in meter;
10.
11.
λ k
= a set of structure dummies indicating the characteristics of the community;
α i and β j
= coefficients to be estimated; and
12.
ε = error term

Results
1.
1.
Note: The dependent variable is sales price; Coefficients of the structure dummies are not shown here; The coefficients represent the mean change in the response variable for one unit of change in the predictor variable while holding other predictors in the model constant; and the t
‐ statistic is the estimated coefficient divided by its own standard error, it means the significant level of the variable.

Discussion
 Based on the data and analysis above, the housing price will be higher if the distance to schools is less. Moreover, if the distance to parks is less, the housing price will be higher too.
 Most of the club goods are consisted with private schools and parks. Club goods are located within the gated communities. Therefore, the club goods provided by the developer can better server the residents.
 But the price of housing in good education district are also very high, which may due to the price of the education service supplied by government is lower than that supplied by private companies. So this kind of public goods is better to take charge by local government, and work with private companies.
 The limitation of this research is lack of the time series analysis. Housing price is affected by many factors, such as the distance from employ center, the distance from downtown. I will include these factors in the further.

Answers for the research questions
1.
 It depends on which categories of public goods.
 By comparing the coefficient of housing price with different public goods, the result will show that the housing market of gated communities are more sensitive to certain categories of club goods than local public goods, and the club goods can be a substitute for centrality in certain aspects.

Answers for the research questions
1.
 All communities are tend to locate near to public goods if they are regulated less. But gated communities in China are required to provide club goods. Will this requirement lead to an efficient use of resources? I doubt it.
 The suggestions for the city governors are: the guidance for public good management should be set up based on identifying the best manager for each category of public goods, such as private company or local government.

References
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