A Study On The Over Entrance Of China's Real Estate Industry And Its Impact On The TFP

In the recent 20 years,China's real estate industry has developed rapidly and played a very significant role in promoting economic growth.However,the overheated real estate industry has also caused the contradiction between high housing price and large inventory.Besides,it has produced the crowding-out effect on the manufacturing industry.In the “structural reform of supply side” which started in 2015,digesting the inventory in real estate industry is one of its major tasks.An important approach to promote such digestion and motivate the high-quality development of real estate industry is to improve the overall efficiency of the real estate industry,thus can avoid disordered competition and inefficient inventory.The basic point of this dissertation is that the high housing price and high profit in China's real estate industry attract a large number of inefficient and low-quality enterprises to excessively enter and invest in the industry,resulting in the overall low efficiency and excessive inventory of the industry.Therefore,it is necessary to start with the market access policy to promote the structural reform of supply side and destocking of China's real estate industry,thus China's real estate industry could transform from the rapid and extensive quantitative expansion to the high-quality development and efficiency improvement.Based on the basic point,this dissertation conducts theoretical research and empirical analysis from the angle of the excessive market access and investment of real estate industry,trying to explain why the total factor productivity(TFP)of China's real estate industry is low.It firstly estimates the TFP overall level of China's real estate industry,and analyzes its characteristics.Then it conducts a quantitative research on the impact of the cross-border investment of the non-real estate enterprises in the real estate industry and the impact of the influx of new enterprises on the incumbent real estate enterprises.Therefore,it explains why the TFP of China's real estate industry is low from the perspective of enterprises' excessive entry.The main research conclusions are as follows:In general,the TFP of China's real estate industry is low,only with an average annual growth rate of 1.11%.It does not correspond to the high growth rate of the real estate industry and lags far behind the growth rate of total factor productivity in Chinese economy.And there are relatively large regional differences,due to the influence of the tilting land policy toward the central and western regions;the TFP of real estate industry in the central and western regions is higher than that in the eastern regions.The TFP of each province's real estate industry has mean value and fluctuation trend,but converges to the steady-state within each region.The TFP of real estate industry is affected by the macroeconomic situation and policies,the loose macroeconomic policy can stimulate a temporary rise of real estate industry's TFPAttracted by the high profit rate of the real estate industry,a large number of enterprises and capital flood into the real estate industry,resulting in excessive competition and low production efficiency.This is an important reason for the difficulty in improving the TFP of the real estate industry in China.Non-real estate listed companies are attracted by the high housing price,they believe real estate industry has high profit margin,so they will invest in real estate industry.Theoretically,such investment will push aside the research and development investment of their main business,which will decrease the TFP.This dissertation conducted empirical research on the investment of China's non-real estate listed companies in the real estate industry,and found that such cross-industry investment did decrease the TFP of these companies,the counterfactual estimation of the real estate investment behavior also proved the above viewpoint.The hollowing of the real economy's development caused by the bubble in real estate industry must be paid enough attention to.Large number of new companies' entering in real estate industry intensifies the competition within industry,which deteriorates the listed companies' business.This shows there is over investment and eclining production efficiency in real estate industry,which not only causes the resources waste but also hinders the development of real estate industry itself.Besides,this dissertation also found out that new entering companies have more negative shock on the efficiency of those companies who are not running business well.China's real estate market lacks an effective survival mechanism,so excessive competition leads to the decline of TFP in the industry as a whole.Based on these conclusions,the policy suggestions are as follows.China's real estate industry should transfom from the rapid and extensive quantitative expansion to the high-quality development and the efficiency improvement.The government could avoid the inefficiency caused by excessive entrance and investment in the real estate industry by formulating reasonable market access policies and effective market elimination mechanism to increase the market concentration.By reducing the unreasonable use of resources in real estate development and promoting the improvement of TFP in the real estate industry,the government ensures the stable and healthy development of real estate industry.