Deepen Housing Provident Fund System Reform to Activate 10 Trillion Yuan in "Dormant Funds"

Lou Feipeng

This year’s “Government Work Report” proposes to deepen the reform of the housing provident fund system, continuing the deployment from the Central Economic Work Conference held in December 2025 to further reform the housing provident fund system. Currently, China’s housing market has shifted from a supply shortage to a basic balance of supply and demand, with inventory reduction of existing homes and improvement of living quality becoming priorities. Since 2022, China has contributed over 3 trillion yuan annually to the housing provident fund, with a total deposit of 32.79 trillion yuan and a balance of 10.93 trillion yuan by the end of 2024. However, issues such as low utilization rate and inflexibility remain.

In recent years, around optimizing the housing provident fund system and activating over 10 trillion yuan of “dormant funds,” various regions have undertaken a series of innovative explorations.

First, in terms of loan limits and down payment ratios, there has been a general increase in loan amounts, with targeted support for key groups. Many cities across the country have raised the upper limits for first and second home provident fund loans, providing higher quotas for families with multiple children, talents, and buyers of green buildings, forming a tiered support system of “basic quota + preferential increase.” Down payments and interest rates have been lowered to ease homebuying burdens. The down payment ratio for first homes has generally been reduced to 20%, with many places implementing “commercial to public fund loans” and “advance payment before loan,” simultaneously lowering provident fund loan interest rates to reduce household interest expenses.

Second, regarding the scope and scenarios of provident fund use, coverage has been expanded to benefit new residents and flexible employment personnel. Many regions have included flexible workers and others into the contribution system, removing restrictions based on household registration and employment type, promoting the system’s extension from urban employee benefits to nationwide social security. Usage scenarios have been broadened to ensure full-cycle support, extending from housing loans to rent withdrawals, old community renovations, elevator installations, property fee payments, and more.

Third, to improve the convenience of using the provident fund, efforts have been made to break down regional barriers and promote cross-region recognition and loans. Many places have eliminated household registration restrictions for cross-region loans, simplified transfer and continuation procedures, and achieved integrated use within urban clusters and metropolitan areas to adapt to large-scale population mobility. Digital empowerment has been fully utilized to enhance service efficiency. Many regions have implemented online processing, cross-province services, and data sharing in the housing provident fund sector, significantly reducing approval times and making it more convenient for residents to handle related affairs.

Overall, the reform of the housing provident fund system covers a broad scope and involves substantial efforts. It is not only a short-term measure to activate existing funds, stabilize the housing market, and benefit people’s livelihoods but also a long-term institutional effort to modernize the housing security system and promote common prosperity.

Firstly, it aims to reduce residents’ living costs and enhance social welfare. Low-interest loans and convenient withdrawals from the provident fund can save billions annually for countless families, effectively alleviating pressure from home buying and renting. For young people, new residents, and low- to middle-income families, the provident fund becomes an essential financial support for stable housing. Moreover, decreasing housing costs effectively increases residents’ disposable income, freeing up more funds for education, healthcare, entertainment, and other consumption.

Secondly, it stabilizes expectations in the real estate market and supports reasonable housing demand. The housing provident fund policy, combined with credit and tax tools, releases both rigid and improved housing needs, helping the market stabilize and recover. Precise support for self-occupancy needs facilitates a transition toward steady and healthy development of the real estate market. Cross-region recognition and loans break regional barriers, accommodating labor mobility across areas, and support the integrated development of urban clusters and metropolitan areas, providing institutional backing for new urbanization.

Thirdly, further promoting fairness in the system and aiding common prosperity. Including new residents and flexible workers in the保障范围, favoring multi-child families and low- to middle-income groups, helps narrow housing保障差距 among different groups, reflecting inclusiveness and底线保障, and better realizing common prosperity.

Looking ahead, continued deepening reform is necessary to better benefit millions of families, inject lasting momentum into the stable and healthy development of the real estate market, and support new urbanization. Specific measures include promoting revisions to the “Housing Provident Fund Management Regulations,” clarifying system positioning, contribution rules, usage boundaries, and监管责任, standardizing nationwide, and allowing local adaptations; expanding coverage to more personnel, establishing low-threshold, sustainable contribution mechanisms; building a unified national housing provident fund information platform to enable seamless cross-region loans, withdrawals, and transfers; adhering to long-term contributions and prioritizing needs, increasing support for first-time homebuyers, low- and middle-income families, and multi-child households, while strictly controlling speculative use; improving fund安全管理, liquidity management, and value preservation mechanisms to balance保障力度 and financial sustainability; deepening digital governance to modernize services through digital means.

This column article reflects only the author’s personal views.

(Edited by: Wang Zhiqiang HF013)

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