The Enigma On Asymmetric Growth Of Housing Investment In China

This dissertation researches on asymmetric growth of housing investment in China after reform of housing marketization at first ten years.From the data of housing investment of 35 large-and middle-sized cities in China from 2000 to 2010,we find this phenomenon:at early period of reform of housing marketization,the initial level of housing investment in most cities are approximate,but with the improvement of housing marketization,in some cities housing investment was growing faster than that in the other cities.In 2010,this gap is further widening,emerging the pattern of the scissors.On this widening gap of development path of housing investment in different cities of the same areas,we define it as "the enigma on asymmetric growth of housing investment in China".To explain this enigma,we propose this idea:in the macroeconomic environment with different financial monopoly strength,because of combined action of macroeconomic policy and local government's policy,in the city diversified equilibrium development paths of housing finance exist.These paths' difference not only effects the changes in financial intermediation's abilities to financing and investment and financial innovation(outside liquidity),but also changes financial frictions(inside liquidity)among financial intermediation and housing developers and local governments.The combined effect of inside and outside liquidity gives rise to manifold asymmetric growth paths of housing investment including private and public houses.To prove this idea,we establish theoretical and analytical framework of "macro financial environment—financial institutions' strategic competition—housing investment"(ECI),incorporating the development of housing finance and financial frictions and housing investment,thereby understanding intrinsic mechanism of asymmetric growth paths of housing investment from system perspective,and the effects of the development of housing finance and financial frictions.Through research on endogenous mechanism of financial frictions,our conclusions indicate that:firstly,the increase in financial frictions quickly reduces private housing investment.Specifically,financial frictions effect private housing investment via two channels:the one is that financial frictions utilize credit channel to control developers' moral hazard and private housing investment from owner capital;the other one is that financial frictions utilize demand for land market and land pricing by local government to change private housing investment from the perspective of land costs.Secondly,the decrease in financial frictions quickly increases public housing investment.Financial frictions effect public housing investment via two channels:the one is that financial frictions utilize financial constraints on private housing market to indirectly change it;the other one is that banks directly restrain outside financing of local government.Thirdly,the decreasing financial frictions improve positive investment interaction of developers and local government between private and public housing market.This synergy accelerated promotion mechanism of private and public housing investment is the important power enhancing rapid growth of housing investment.Fourthly,the improvement of the development of housing finance helps to ease financial frictions.When bank is at a higher level of the development of housing finance,its capability of financing or financial innovation will be remarkably enhanced,and capability of resisting risk on housing market so does.Thus,bank can provide more liquidity for housing market,and promote capital's allocation efficiency in the housing market,thereby reducing financial frictions and increasing inside liquidity of developers and local governments.Fifth,the improvement of the development of housing finance and the reducing financial friction will significantly increase social welfare.Then,this article from the dynamic perspective characterizes the endogenous process of the development of housing finance,and analyses the asymmetric effect of dynamic equilibrium path of the development of housing finance on housing investment,and explain the reason of the asymmetric growth of housing investment.According to the strength of financial monopoly power,the economic environment of the city is divided into three periods:period of financial repression and financial monopolistic competition,financial liberalization.Our conclusions demonstrate that:firstly,in the financial monopolistic competition period,the earlier conversion of the financial development model helps to skip the G-trap of the development of housing finance,and converge to a development path with higher financial efficiency,thereby improving rapid growth of housing investment and converging to a higher level of equilibrium investment.Delaying the timing of the conversion is easy to fall into the G-trap of the development of housing finance,and always keeps on the development path with lower financial efficiency.In G-trap the equilibrium level of housing investment is significantly lower than that in the destructive innovation mode.Therefore,at the same period,the different timing of the conversion forms a pattern of asymmetric growth of housing investment.Secondly,during the period of financial repression,the earlier conversion of the financial development model is easy to fall into the trap of financial innovation.It not only can't solve the existing financial problem,but also exacerbate difficulties in the investment and financing of housing market,reduce financial efficiency,increase financial friction,and reduce the equilibrium level of housing investment.While retains the original monopolistic financial system and maintains the slow growth of housing market and housing investment,delaying the timing of the conversion avoids the devastating effect of financial innovation,eliminates the risk of the conversion of the financial system,and get rid of the trap of financial innovation.Therefore,at the same period,the different timing of the conversion also forms two paths of asymmetric growth of housing investment.Thirdly,at the financial liberalization period,all banks directly select the development mode of the destructive innovation from the start.The equilibrium path of the development of housing finance gradually converges to the equilibrium with the highest financial efficiency,thereby effectively stimulating the development of housing market.At this period,there is only one path of housing investment in the city.Fourthly,in the long run,the change of macro financial environment will reshape the pattern of the asymmetric growth of housing investment.When monopoly power of large-scale banks is decreasing,the macroeconomic environment evolves from financial repression to financial monopolistic competition,again toward the financial liberalization.In this process,the influence of equilibrium path of the development of housing finance by local government constantly decreases,and the equilibrium level of the development of housing finance constantly increases.The pattern of asymmetric growth of housing investment caused by imperfect financial environment,also because of the reform of the financial liberalization gradually converges to a single path with the highest financial efficiency.Finally,from the theoretical model to real data,we test the robustness of ECI framework.We use the data of 35 large-and middle-sized cities in China from 2000 to 2010,to research on the effect of the development of housing finance and financial friction on housing investment in two types of cities.Our conclusions indicate that:firstly,about the determining factors of financial frictions and the development of housing finance.Financial friction faced by developers depends on the characteristics of the developers,financial institutions,and intervention by local government.These factors make different effects on financial frictions in two types of city.The development of housing finance depends on financial deepening and efficiency of financial institutions,and financial marketization.In SHIC the endogenous power promoting the development of housing finance for a long time is better than that in WHIC.Secondly,the development of housing finance has significantly negative effects on financial frictions.Namely,with the improvement of the development of housing finance,multiple factors restricting local developers' financing are being further improved,and financial friction is being reduced.In SHIC the improvement of the development of housing finance on the financial friction is superior to that in WHIC as a whole.Thirdly,considering the development of housing finance,in two classes of the city an increase in financial frictions significantly reduces public and private housing investment,and the influence degree in WHIC is significantly higher than that in SHIC;the improvement of the development of housing finance not only directly increases public and private housing investment,but also by easing financial frictions indirectly stimulates public and private housing investment,and the influence degree in SHIC is significantly higher than that in WHIC,and the long-term impact is greater than short-term impact.Fourthly,because of the unceasing enhancement of the development of housing finance in SHIC,financial frictions are improved significantly,and restriction on housing investment further reduces.It overall promotes the growth of housing investment.However,in WHIC the development of housing finance is relatively slow,the constraints of financial frictions on housing investment is stronger,resulting in slower growth of housing investment,and ultimately strengthening the pattern of asymmetric growth of housing investment.Based on the interpretation of the asymmetric growth of housing investment,the following suggestions are given:in the different period of financial development,according to their own interests,local governments can adjust the strength of fiscal and land policy,control the timing of the conversion of the development mode of housing finance,prevent the development of housing finance into the G-trap or the trap of financial innovation,reduce social deadweight loss and financial friction,promote housing investment converging to the equilibrium level with higher financial efficiency.The central government and regulators of macroeconomic policy should focus on the financial liberalization and market-oriented reforms,improve the market of housing finance,encourage financial innovation,reduce intervention by local government,eliminate financial friction,and promote steady growth of housing investment and healthy development of housing market.