The Interactive Effects Between Optimization And Upgrading Of Chinese Industrial Structure And Housing Price Changes

One of the important driving forces of China’s economic growth was the rapid development of the housing industry over the past decades. However, many areas of China are under the pressure of huge housing stock, because the local housing demand which is influenced by the evolution of industrial structure is far less than the excessive supply. So, we should study on the interactive effects between optimization and upgrading of Chinese industrial structure and housing price changes for the healthy and sustainable development of housing industry.Firstly, we analyzed the meaning of optimization and upgrading of industrial structure, and reasonably measured two symbols of it, which are rationalization and advancement. We found that accompanied by a rise in housing prices, the levels of industrial structure’s rationalization and advancement are improving within 2003 and 2013. We also analyzed the relationship between those two in reality, and the problem in the development of housing market caused by neglect of this intrinsically link.Then we theoretically discussed the interactive effects between optimization and upgrading of industrial structure and housing price changes. On the one hand, optimization and upgrading of industrial structure influences the housing price through the intermediate variables like population aggregation, employment structure, income and expectation for the economy. On the other hand, housing price changes influences the industrial structure though labor migration, employment choice and the expectation of housing prices.Next, we empirically analyzed the relationship between two using GMM estimation. The empirical results show that the explanatory power of optimization and upgrading of industrial structure to the rise of housing prices is up to 11%, and the influence’s degree is obviously uneven for different regions. The rise of housing prices significantly promoted the optimization and upgrading of industrial structure. However, such a positive role will significantly reduce if housing prices rise markedly.Finally, we gave several policy recommendations based on the theoretical and empirical results. Firstly, the macro-control of housing market should take local actual industrial structure level into consideration. Different regulation should be implemented according to the different regions, cities and different period. Secondly, the healthy development of housing industry should rely on the intrinsically link of economic system, after the local industrial structure realize optimization and upgrading. Thirdly, region can guide labor for rational flow, attract and retain high-quality personnel for those methods can promote both optimization and upgrading of industrial structure and the healthy development of housing market.