Study On Impacts Of Real Estate Investment On Manufacturing

In recent years, the real estate market developed rapidly, and played an indelible role in stimulating the development of manufacturing enterprises such as steel, cement and other downstream industries. The real estate enterprises themselves also made huge profits. But what in stark contrast with the real estate is the development of China’s manufacturing industry. As global economic downturn continues, manufacturing exports are still caught in dilemma. With the "demographic dividend" gradually disappearing, labor costs and land prices are rising. The stress of domestic production costs rising and international competition in exports cuts down the profits of manufacturing companies. China’s traditional manufacturing industry has encountered a bottleneck. So are China’s manufacturing difficulties related to the real estate? In addition to promoting effect, does the real estate have a crowding-out effect on manufacturing? What is the principle of the impact on manufacturing?To solve these problems, this paper studies the impact of real estate investment in the manufacturing sector from both theoretical and empirical aspects. Firstly, review the previous theory and apply logical analysis to analyze the impact principles of real estate investment on manufacturing, including industry association theory, Tobin’s Q theory, financial accelerator theory and wealth effect theory. Then, the paper analyzes the current situation of the real estate and manufacturing, finding that the scale of China’s real estate is increasing, the real estate industry is financialization gradually, real estate companies get high profits, and speculation is serious. On the contrary, manufacturing faces overcapacity, lack of technological innovation, profitability weakened and main business contraction. Finally, this paper set up non-parametric panel test models to examine the real estate impacts on manufacturing, empirically analyze the macro panel data, regional panel data and industry panel data, and use pointwise regression to show the dynamic changes.The conclusions are:(1) From the view of the impacts, real estate investment has both promote effect and crowding-out effect on manufacturing. Effector mechanisms include:industry association effect, Tobin’s Q and financial acceleration effect, the wealth effect. The crowding-out mechanisms include:push factor prices, capital crowding-out effect, impede technological progress and speculation.(2) Take the nation as a whole, the real estate investment has a stimulating effect on the manufacturing sector, but the stimulating effect is close to the "threshold", which means that real estate investment has the main effect of promoting, but the effect decreases gradually, and the crowding-out effect increases.(3)Real estate investments in eastern and western regions mainly promote manufacturing sector, promoting effect is greater than crowding-out effect, and the central region has a significant crowding-out effect. Since the differences of industrial composition, of market and of the housing development, the impacts of the real estate investment on manufacturing are different in different region.(4) The real estate industry has different impacts on different industries. This paper selected metal products manufacturing industry, chemical industry and non-metallic mineral products industry, which are related to the real estate closely. The empirical results show that the real estate is driving the development of them, but the dynamic influence diagrams show different trends.Based on the above conclusions, the paper makes the following proposals:(1) Suppress the irrational exuberance of real estate market, and crowed out speculators. Carry out real estate tax as soon as possible and complete the registration of real estate.(2) Develop differentiated real estate policies, and strengthen the control of the regional real estate market. Apply classified strategies for different people and different cities, avoid "one size fits all" policy across the country.(3) Create a benign external environment for manufacturing, and promote the manufacturing industry return to the real economy. Develop inclusive financial system corresponding to SMEs and establish a multi-level financial guarantees system to complete SME credit guarantee policy, build and improve the capital market system.(4) Create a benign external environment for manufacturing, and promote the manufacturing industry return to the real economy. Improve the tax policy system, increase funds for vocational education, and strengthen cooperation between enterprises and research institutions.