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Questions and Answers at
Press Conference Following the Signing of the
U.S.-China Affordable Housing Demonstration Project

Secretary of Housing and Urban Development Andrew Cuomo
Minister of Construction Yu Zhengsheng
Ministry of Construction, Beijing
May 24, 2000

Questions and Answers:

Q: (Xinhua News Agency): My question is for Secretary Cuomo. After your visit these last few days, you have an understanding of the situation in China's cities and countryside. My question is: Do you believe that the U.S. has some experience or has learned some lessons in the area of resolving the problems of housing for lower or middle classes, that China can learn from?

Secretary Cuomo: There are lessons we can learn from each other. The United States has done much in the area of housing; we still have much more to do especially when it comes to low or moderate income. There are still many people who need affordable housing in the United States. Obviously the problem in China is greater in terms of scale.

The numbers are larger in China, the population is larger so the numbers are greater. But the fundamental issues remain the same. We have experimented with many different ways to subsidize housing -- what we call "provide affordable housing" in the United States. And one of the elements of this relationship is us sharing the lessons that we have learned over time by trial and error on the best way to subsidize housing: using the tax system, etc. to make housing more affordable.

Q: (China Daily): Mr. Cuomo, I am a reporter from China Daily, the only national English newspaper, and I have a question for you. Just now you said there are certain lessons which the United States has experience in, and that the United States wants to share these lessons with China. Could you clarify these lessons in detail, especially when we talk about the securitization of mortgages? You know the securitization of mortgages may be of concern to many people, so I think it's very important that China share the lessons from the United States. It will certainly benefit many common people. Thank you.

Secretary Cuomo: Housing has many different purposes that it serves in our society. At the human level it provides shelter to survive, comfort and stability. On a different level, it is also a significant economic engine for the United States. They estimate that 20-25% of the GDP of the entire country is driven by the housing arena. So there's also a tremendous economic impact that housing can provide if it's done correctly. One of the real success stories in the United States with housing is what we call the "mortgage-backed securities." It is essentially selling securities, which are backed by mortgages from homes within the country. This has brought much new capital into the housing system and has created more housing, more home ownership, and thus stimulated the economy creating more jobs, more wealth. So that is a particular element that we are going to focus on in this relationship and we are hoping to execute a demonstration of mortgage-backed securities by the end of the year.

Q: China Central Television: My question is directed at Mr. Yu. Concerning the Sino-U.S. Cooperation Project in the housing industry, what specific items do you have and do you think they can be implemented? If so, do you think the implementation of those projects will play a promotive role to the industrialization of housing in China? And my second question: do you have any plans for the mortgage-backed securitization here in China?

Minister Yu: This Sino-U.S. cooperation project in housing was actually initiated during Bill Clinton's visit to China in 1998, so this is a consensus reached by the two Presidents. And I and Mr. Cuomo have signed a Memorandum of Understanding last November. As for the main contents: firstly, we will do some policy research. Basically, it's research about finance, about taxation, about insurance, about market management, [and] legal issues, as well as technological policies. So basically we will do some research on American policies. For the near future, we are basically going to do two things. Firstly, we are going to select a community, a district, to work on. Basically we will work on the planning and also the construction. And secondly, we will also select a building to do the planning and construction. For the materials, some of the construction materials are actually donated by the American side. Also, we will cooperate in planning and construction. The agreement we signed just now is basically an agreement concerning the planning and the construction of those district houses.

As for the mortgage-backed securities, we will just want to do some research. Especially we will want to know the practices in the States. And based on that, the relevant Chinese departments, especially the People's Bank of China, will jointly come up with some consensus. And then, based on that, will select some places to do this experiment. The securitization of this kind will not be of any direct help to the Chinese citizens purchasing houses -- it doesn't mean that it will give them any conveniences or lower interest rates -- but rather, for the long run, it is of great significance for the operation of funds on the part of the banks.

And as for the reform of the legal system, taxation system concerning housing, basically we have to do that on our own. But I'm sure that the cooperation of foreign friends will be of great help in this work. That's my answer.

[Interpreter - Also the CCTV reporter had a question directed to Mr. Cuomo. What is your view and your observation on PNTR?]

Secretary Cuomo: The PNTR vote is going to be a very close vote; this has been a very heated debate in the United States. President Clinton has worked very hard to do his best to see that the vote passes. I yesterday had the good fortune of having an audience with Premier Zhu Rongji and I told him that in my seven years with President Clinton I don't think I have seen him work harder on any single issue than he has worked on this issue. I believe that at the end of the day the merits will win, and in this case the merits say it is good for China, it's good for the United States, and I believe it will win. So, I am optimistic.

Q: (Norman Bottorf), Associated Press Television): Another question related to the PNTR question. I am with Associated Press Television. What did Premier Zhu Rongji say to you yesterday about his thoughts about the PNTR vote? How important was it to him in your discussions? And, secondly, if there is a negative vote, and it is going to be very close by all reports, what would its impact be on initiatives such as yours, and in a broader sense on the bilateral relationship between Washington and Beijing?

Secretary Cuomo: Premier Zhu Rongji was very clear that the PNTR vote was a very important vote. He thought it was very important for his country and for the United States of America. And he likewise was hopeful and optimistic that it would pass, but understood how difficult the debate has been thus far. This specific issue, our joint cooperation, began before PNTR was an issue. It was done by mutual agreement between President Clinton and Premier Zhu Rongji and this is not reliant in any way on the PNTR vote. This has been going on, it will continue to go on, no matter what happens. But there is no doubt that the essence of what we are doing, the expansion of ideas, the bringing in of other companies, and markets, would be increased if PNTR were to pass. And again, I am hopeful and optimistic that it is going to pass, I believe it will pass.

Q: (Charles Hutzler, Associated Press) Another question from the Associated Press. I am wondering, Secretary Cuomo, whether you could elaborate on what you think the significance of this PNTR vote is. How do you expect the economic landscape to change here? And yesterday, in your meeting with Zhu Rongji, you said that he understood the debate that was going on in the United States; did you all talk about the possibility of conditions being attached to the PNTR legislation such as the human rights commission to monitor China's observance of human rights?

Secretary Cuomo: The economy is changing in China. The economy is changing in the United States. They say the only constant nowadays is change. In my opinion, PNTR facilitates that change. It opens doors, it brings in new ideas, it brings in new companies, that we are now communicating about, that we are now seeing, we are now encountering, but which actually allows the commercial to catch up with the communication in many ways. We did discuss some of the issues that were being raised in the debate in Washington around PNTR. One of them is the issue of human rights. And a legislative resolution to that issue is the formation of a human rights commission which would be looking at these issues. And if that resolves the legislative debate for some legislators, and if that makes a no vote a yes vote, then I think it's a good idea. Because the bottom-line, the end game is a successful vote on PNTR. And as a person who has watched the legislative process in the United States, it is often far from perfect. So one must keep their eye on the goal, and the goal here is to pass PNTR. And the legislative process that gets us there - there are always issues that arise, but the question is resolving those issues so you reach the goal, and the goal is passing PNTR.

Minister Yu: I think Mr. Cuomo should become the Secretary of Commerce.

Secretary Cuomo: Don't feel badly; they don't want to talk about housing in the United States either.

Q: (Economic Daily to Minister Yu): During the past two years there have been great changes and progress made in the housing reform sector and now the Chinese government encourages its citizens to buy houses, whereas in the economic restructuring process, we see that many people's income is rather low, and also some workers have been laid off. So what are the policies or plans that you have on the part of the Chinese government to support Chinese citizens to buy houses?

Minister Yu: To solve the housing problem for those low-income families, we basically have a policy, a "united housing meeting" [sic] policy. By that we mean that we will specify a low rent for those low-income families to rent those houses. And also, we will rent the existing houses at a rather low price. Another measure that we are going to take is that the Chinese government will establish some new houses, but the construction area shouldn't be too large, and also the rent should be low so that it is affordable on the part of the low-income families. Of course, to improve the living situation for those low-income families [it] is [necessary] to increase their income.

Content Archived: January 20, 2009

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