Research into eastern European housing reform indicates that privatization has been accompanied by processes of social and physical exclusion and segregation. Has the Chinese housing reform been accompanied by similar problems? This paper addresses this question by examining the early evidence on the social and spatial consequences of housing reform. It begins with a discussion of the particular social and spatial patterns of Chinese cities developed during the early years of Communist control and then examines the social and spatial impacts of housing reform. It is argued that although housing reform has brought significant changes to the housing provision system and improved many urban residents’ living conditions, it has not entirely broken the traditional system. Reform was to a large extent carried out within work‐unit establishments and has had very different impacts for different social and economic groups. In addition, spatial impacts in urban areas have varied between old and new areas and between rich and poor areas.