A Study On The Sustainable Development Of China's Real Estate Industry

The real estate industry is an important pillar of the national economy. At present,the macro-control in China's real estate industry has put the market into a deepadjustment stage; hence, the sustainable development of the industry is especiallyimportant for the growth of our national economy. Furthermore, financial risks havebecome the key variable to influence the sustainable development of the industrybecause the current mortgage crisis in the United States has formed a global financialcrisis. Therefore, how to reduce the financial risks from financial innovation isextremely meaningful to speed up the sustainable development in the real estateindustry.This article describes the current situation of the China's real estate industry inthe economic transitional period, and discusses main influences on sustainabledevelopment in the real estate industry: whether there are any bubbles in Chinese realestate industry, and whether the turning point has come, and whether the pillarposition of the industry is sustainable? Through research, the author finds thesequestions are related with real estate bubbles and financial risks. Therefore, the authorconcludes that the real estate bubbles and financial risks are the important factors thatinfluence the sustainable development of the real estate industry.While some achievements have been made in China's real estate finance, thereare still a number of problems as both the productive capital and the consumptivecapital rely on the banking industry. The sole capital-loan channel concentrates thesystematic risks in the bank system, jeopardizing the stability of real estate financeand even the whole financial system.Financial innovation is an effective way to reduce the real estate financial risks,and to help the sustainable development of the industry. Based on a literature reviewon Western financial innovation theories, the author researches financial innovation inthe real estate industry, and also discusses how the financial innovation promotes thedevelopment of the real estate industry.There is abundant research in real estate financial innovation. Based on theemergent issues in real estate finance development, the author seeks to improve thefinancial system from four aspects, that is, financial regulations, financial tools, financial market and financial organizations. For example, the innovation of personalcredit regulation can help prevent credit crisis; house mortgage securitization candiversify the bank system risks and prevent the formation of real estate bubbles.Real estate financial innovation has a double edges effect. On the one hand, itcan promote the sustainable development of the real estate industry. On the other hand,it can bring about side effects and new risks. The author suggests China should learnfrom the lessons of the American mortgage crisis. China should evaluate the proprietyand strength of management to prevent the emergence of new risks. The author usesthe view of financial globalization and transit economy to make a number of furthersuggestions on how to prevent the new risks.