Research On The Relationship Between Investment In Real Estate Industry And Economic Growth In China

The Investment plays an important role on promoting the economic growth of a country. The real estate investment as an important component of fixed investment promotes the economic growth of a country too. It is an urgent problem that how to enhance our real estate enterprise developing continually and healthily and maintain the real estate investment adapting to the economic growth of the country under the socialist market condition.In this paper, based on the analysis on our real estate investment and the national economic development, we selected the actual data in our country from 1999 to 2009 and analyzed the interaction relationship between the real estate investment and the national economic growth under the guidance on the real estate investment and the economic growth theories.Based on the cointegration test and time-series error correction model according to China's real estate investment and GDP, we can obtain the following conclusions: There is a long-term stable equilibrium relationship between real estate investment and national economic growth in China. Derived from the cointegration equation, the long-term elasticity that real estate investment impacts on national economic growth is 0.364.That is, to real estate investment for each additional 1%, GDP will increase 0.364%. We can see that in the long run, China's real estate investment has a significant contribution to national economic growth. When the real estate investment growth rate could be harmonious with economic growth and macroeconomic policies, real estate investment would greatly promote the national economic growth, and vice versa.Real Estate Investment and Economic Growth in China have two-way causality. From the results of Granger causality test, at 92.05% probability level, real estate investment is the Granger cause of GDP; at 94.88% probability level, GDP is the Granger cause of real estate investment. There is an interaction between these two aspects. In one hand, real estate investment plays a significant role in promoting national economic growth; in other hand, national economic growth can lead to real estate investment.Analyzing the error correction model, the short-term elasticity, which real estate investment impacts on national economic growth, is 0.184, that is, in a short term, to real estate investment for each additional 1%, GDP will increase 0.184%. As a result, the long-term impact that real estate investment influences national economic growth is more significant than short-term effect. The adjustment of the long-run equilibrium (-0.229) is not very obvious, that is because of China's real estate industry started relatively late, there are not well established and well-developed mechanisms, which need to be further developed and improved.