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Has China's Housing Production Peaked?

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  • Kenneth Rogoff
  • Yuanchen Yang
Abstract
China's real estate has been a key engine of its sustained economic expansion. This paper argues, however, that even before the COVID‐19 shock, a decades‐long housing boom had given rise to severe price misalignments and regional supply–demand mismatches, making an adjustment both necessary and inevitable. We make use of newly available and updated data sources to analyze supply–demand conditions in the fast‐moving Chinese economy. The imbalances are then compared to benchmarks from other economies. We conclude that the real estate sector is quite vulnerable to a sustained aggregate growth shock, such as COVID‐19 might pose. In our baseline calibration, using input–output tables and taking account of the very large footprint of housing construction and real estate related sectors, the adjustment to a decline in housing activity can easily trim a cumulative 5–10 percent from the level of output over a period of years.

Suggested Citation

  • Kenneth Rogoff & Yuanchen Yang, 2021. "Has China's Housing Production Peaked?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(1), pages 1-31, January.
    • Handle: RePEc:bla:chinae:v:29:y:2021:i:1:p:1-31
    DOI: 10.1111/cwe.12360
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    References listed on IDEAS

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    Cited by:

    1. Beer, Sonja, 2022. "Chinas Immobiliensektor: Wie groß ist die Krise?," IW-Reports 19/2022, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    2. Yubin Huangfu & Haibo Yu & Zuoji Dong & Yingman Wang, 2024. "Research on the Risk Spillover among the Real Economy, Real Estate Market, and Financial System: Evidence from China," Land, MDPI, vol. 13(6), pages 1-26, June.
    3. Kenneth S. Rogoff & Yuanchen Yang, 2022. "A Tale of Tier 3 Cities," NBER Working Papers 30519, National Bureau of Economic Research, Inc.
    4. Wan, Junmin & Qiu, Qiqi, 2023. "Industrial investments and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 832-852.
    5. Gern, Klaus-Jürgen & Kooths, Stefan & Reents, Jan & Stolzenburg, Ulrich, 2021. "Weltwirtschaft im Winter 2021 - Gebremste Expansion [World Economy Winter 2021 - Temporary slowdown]," Kieler Konjunkturberichte 85, Kiel Institute for the World Economy (IfW Kiel).
    6. Wan, Junmin, 2024. "Transmission of housing bubbles among industrial sectors," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 692-701.

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