Working Paper: NBER ID: w30519
Authors: Kenneth S. Rogoff; Yuanchen Yang
Abstract: This paper provides new estimates of the housing stock, construction rates and price developments by city tier in China in order to understand where excess supply might be concentrated, and the implications of any significant contraction. We also update estimates of the size of China’s rapidly evolving real estate sector through 2021, allowing one to look at the initial impact of COVID-19, as well as extending the analysis to incorporate urban-expansion related infrastructure construction. We argue that China overall faces imbalances between supply and demand for housing stock, but the problem is significantly deeper in the generally smaller and lower income tier 3 cities, which nevertheless account for more than 60% of both China’s GDP and its housing stock.
Keywords: No keywords provided
JEL Codes: F39; G01; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tier 3 city status (R11) | extent of overbuilding (L74) |
| tier 3 city status (R11) | share of household wealth in real estate (G51) |
| tier 3 city status (R11) | reliance on land sales for financing (R51) |
| reliance on land sales for financing (R51) | higher debt burdens (F34) |
| demographic trends (J11) | construction needs (L74) |