This article consists of three parts. The first part deals with theory, and evaluates the pros and cons of government involvement in urban housing and of renting versus ownership. In the second part, the paper summarizes the different housing policies that have been implemented in the United States, Europe, and Asia and suggests that there is a tradeoff between encouraging home ownership and social housing since countries that have favor the former have neglected the latter (like Japan, Spain, etc.). In the third part, these insights are used to address the problem in China. One of the main concerns in Chinese cities is the raising of poverty mainly by “illegal” migrants (who are Chinese rural residents) living in “urban villages”. The paper proposes two steps to fight poverty in Chinese cities. The first one is to require that the Chinese government recognizes these “illegal” migrants by helping them becoming “legal”. The second step is to encourage social housing that directly or indirectly subsidizes housing for the poor.