Research On The Impact Of China's Real Estate Investment On Economic Growth

Since the beginning of the 21st century,China's urbanization process has accelerated.Housing reform,urbanization,and the reconstruction of old urban houses have brought development opportunities to the real estate market,and have stimulated real estate investment.Real estate investment has also driven and supported the Chinese economy to a certain extent.The industry chain related to real estate investment is long,with many upstream-and downstream-related industries.Real estate has vital links with many sectors of the national economy.As an important component of overall investment in China,real estate financing has an investment multiplier effect that drives economic growth.The growth of real estate investment has also played an important role in urbanization,stimulating domestic demand,providing jobs,and improving people's living conditions.The past 20 years can be seen as a golden period for the development of China's real estate industry,with an average annual nominal growth rate of real estate investment close to 20%.Although the current growth rate of real estate investment has slowed down compared to previous years,real estate investment occupies a relatively high proportion in the total investment in fixed assets and gross domestic product,and plays an important role in the country's economic development.The stable and sustained growth of real estate investment directly affects the stability,sustainability,and healthy development of the national economy.However,at the same time,there are certain disadvantages and risks associated with the high growth of real estate investment,including potential financial and economic fluctuation risks.For example,the real estate bubble in Japan in 1990 caused the Japanese economy to slump,and the 2007 US real estate bubble indirectly triggered the global financial crisis.Thus,unchecked development of the real estate industry can bring about negative impacts on the stable development of the overall economy.In recent years,the domestic real estate market has been developing significantly.However,due to high housing prices and excessive real estate investment,governments at all levels have also issued a number of regulatory policies.Extensive research has been conducted by domestic experts and scholars with respect to how real estate investment relates to economic development,and whether it has a positive or negative impact on economic growth.However,there are still some approaches that have not been utilized,such as quantitative analysis.For example,the impact of real estate investment on the three industries,the impact of real estate investment scale and growth rate on economic growth,and the mechanism of real estate investment space spillover effects.Based on theoretical and empirical research conducted in China and abroad,this paper uses a combination of qualitative and quantitative research to conduct in-depth research into the impact of Chinese real estate investment on economic growth.It proceeds according to five main sections:(1)Introduction,literature review,theoretical basis,and analysis of the action mechanism.These sections provide the guiding ideology and research basis for the article.The introduction section mainly explains the research background,significance,content,methods,and contributions of the article.The literature review section summarizes and delineates previous research and the main viewpoints elucidated,and provides a brief analysis and commentary on the topic at hand.The theoretical basis section analyzes and explains several theories related to real estate investment and economic growth,including classical economics,industrial economics,spatial agglomeration economics,etc.The action mechanism section mainly discusses,theoretically and qualitatively,the mechanism underlying the impact of real estate investment on economic growth,and provides logical directions for subsequent research.(2)The status of real estate investment development and its relationship with the macro economy.This part first reviews the development history of China's real estate market,and the development status of China's real estate investment,and then empirically tests the relationship between real estate investment and GDP,and real estate investment and the three industries.Research has shown that real estate investment occupies an important position in the national economy,and has a long-term equilibrium relationship therewith.Real estate investment and GDP have significant short-term interactions with each other,and real estate investment has contributed significantly to the three industries.(3)Analysis of the scale difference of real estate investment to economic growth.This part establishes a panel threshold model based on data from 31 provinces and cities in China from 2000 to 2017,and analyzes differences in the impact of real estate investment on China's economic growth according to different scales,different growth rates,and different levels of economic development.The results show that the impact of real estate investment on China's economic growth has been significant,but as the level of economic development has increased,the impact of real estate investment on economic growth has decreased.Further,the excessively rapid growth of real estate investment has significantly inhibited economic growth.(4)Comparative study of the impact of real estate investment on economic growth by region and time.This part is again based on the panel data for the 31 provinces and cities in China from 2000 to 2017.Models are established for all samples,different regions,and different regions at different times to empirically analyze the impact of real estate investment on China 's economic growth.The results show that the impact of real estate investment on China 's economic growth has been higher in the relatively more developed eastern and central regions.After 2008,the impact on economic growth did not change much in the eastern region,increased significantly in the central region,and declined in the western region.(5)Study of the spatial spillover effect of real estate investment on economic growth.This part first analyzes and discusses the mechanism behind real estate investment's spatial spillover effect on economic growth;it then builds a panel space model based on data from 31 provinces and municipalities in China from 2000 to 2017,and empirically analyzes the space spillover effect of real estate investment on China's economic growth.The results show that real estate investment has had a spatial spillover effect on economic growth,and the flow of real estate investment elements(here,the upstream and downstream industrial chains related to the real estate industry and their human,technology,and product capital)has caused spatial spillover effects on real estate investment.The conclusions of this article are as follows:Real estate investment plays an important role in the development of the national economy in China.The stable and sustained growth of real estate investment directly affects the stability,sustainability,and healthy development of the national economy,while excessively rapid growth of real estate investment reduces the promotion of economic growth.Furthermore,the flow of real estate investment factors has a spatial spillover effect from real estate investment,and this effect in turn promotes economic growth.Based on this,the following suggestions are proposed:(1)Affected by the downturn in the international economic environment,the Chinese economy is currently facing great downward pressure,and it is imperative that fixed asset investment is leveraged as a key in promoting economic growth.As an important part of fixed asset investment,real estate investment should maintain an appropriate growth rate.Such growth rate will be conducive to expanding domestic demand,consolidating the achievements made in recent years regarding reductions in production capacity,and alleviating downward pressure on the economy.(2)The continuous advancement of urbanization will inevitably lead to an increase in urban real estate demand.Real estate investment should be matched with urban development.Appropriate real estate investment can ensure cities offer good urban living environments and urban investment environments,attracting more labor and investment enterprises.(3)According to the level of regional economic development,differentiated policies should be implemented,the scale of real estate investment should be reasonably controlled,and regional real estate control policies should be adopted.The regulation of housing prices should be treated differently compared to that of real estate investment.Policies to curb excessive increases in housing prices without affecting real estate investment can be formulated and implemented,and the positive role of affordable housing can be brought into full play.(4)Real estate investment has a spatial spillover effect,which is realized based on the flow of real estate investment factors between regions.The formulation of future real estate market regulation policies should fully consider this spatial spillover effect and the structural heterogeneity of the industry.In addition,when forming such policies more consideration should be given to developing the real estate industry chain in economically adjacent regions.(5)Real estate investment has a large impact on short-term fluctuations in the national economy.Overly large or small growth rates in real estate investment indicate an imbalance in the industrial structure and inefficient economic development.In addition,any sharp rise or fall in the real estate market will seriously disrupt economic development.Therefore,maintaining stable real estate investment is key to promoting the steady and rapid growth of China's economy.The contributions of this article are as follows:(1)The paper theoretically analyzes the real estate investment spatial spillover mechanism and empirically analyzes the spatial spillover effect caused by the flow of real estate investment factors.It also verifies that the real estate investment space spillover effect can promote economic growth.(2)The paper uses the threshold effect model to empirically analyze the scale difference of real estate investment on economic growth from three perspectives.It finds that real estate investment has a significant positive effect on economic growth,but when the level of economic development is higher or the growth rate of real estate investment,the impact of real estate investment on economic growth decreases.(3)The paper quantitatively analyzes the contribution of real estate investment to the development of the three industries in China.It is found that the contribution of real estate investment to the secondary industry is greater than that to the primary and tertiary industries.