A Historical View of China’s Real Estate Industry

Abstract: This study starts from the historical view of China’s real estate industry formation and development. It is evidenced that there were no real estate industry nor real estate market in China’s long past history. China’s real estate industry was firstly emerging since the early 1980s; its development to a large extent should be attributed to the national Housing System Reform. During the 30 years development, real estate industry has become a very important part of national economy. In the empirical research, we investigate the relationship between housing investment and the economic growth of China by using the yearly data from 1986 to 2010. The recent developed Co-integration, Error Correction Model, and Granger Causality test is employed. Our result supports of the long-term and bidirectional relationship between housing investment and economic growth. For the short term, we found only housing investment has significant impact on economic growth. At last, we conclude that we should not over rely on housing investment and arbitrarily use it to pull GDP growth of China, whereas to stimulate consumption by using housing investment seems appropriate in short period.