The state of housing has a direct impact on a country's level of public health and an indirect effect on labour productivity through the general morale of the workers. Practically all the developing countries face serious housing problems, particularly in the urban areas. China, a developing country that upholds socialist economic principles, is no exception in this regard. One of the purposes of this article is to demonstrate that China shares with many developing countries the same intractable problems – namely, a shortage of housing supply and housing inequality in the urban sector. But having said that China's urban housing problem is brought about by policy directives and institutional arrangements that differ entirely from those in capitalist economies.