From the characteristics of spatial distribution of government-subsidized houses in five Chinese mega-cities (Beijing, Shanghai, Guangzhou, Nanjing and Wuhan), the following problems can be observed: remote spatial location, large-scale centralized construction and imperfect auxiliary facilities. By analysing the causes of these problems, the author states the following: building governmentsubsidized houses in the outer suburbs of mega-cities may bring about a series of social problems, including the intensification of social segregation and repulsion, the emergence of urban slums and poverty, the inter-generation continuance of poverty and the intensification of social risks. Therefore, the author suggests that the government should promulgate corresponding laws and regulations, so as to optimize the spatial distribution layout of urban governmentsubsidized houses and justify the distribution of urban spatial resources. The author suggests that the government should enact the Housing Law as soon as possible and adopt the model of the auxiliary construction of governmentsubsidized houses and the model of mixed residence of different classes, in order to reduce China's social risks and transition costs in the period of social transition.