China's Real Estate Bubble Past, Present, and Future
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| Format: | Thesis |
| Kulcsszavak: | China Economy economic crisis Fiscal system Land policy Real estate bubble |
| Online Access: | http://dolgozattar.uni-bge.hu/53862 |
| Abstract: | The Real Estate Bubble in China has emerged as a time bomb for the country's economy. Various indicators, such as the private sector debt-to-GDP ratio and the housing price-to-income ratio, suggest that the current degree of real estate bubble in China has exceeded that of Japan's real estate bubble peak around 1990. What is puzzling is that if we look at the relevant academic research in China, scholars had already begun warning about the phenomenon of real estate bubble in the early 21st century. Economists have been issuing warnings for over two decades, and the real estate bubble has continued to grow for more than two decades. China's real estate market is not a free market but a highly controlled policy market, heavily influenced by government policies. To explore the origins and driving forces of the real estate bubble, we must go back to the 1994 fiscal reform in China, where a unique fiscal policy created a perpetual motion machine for the "real estate" bubble. This paper adopts an empirical research methodology, utilizing data collection, analysis, as well as the author's investigation and interviews, to comprehensively reconstruct the trajectory of the real estate bubble in China. In recent years, as China's economic growth has slowed down, particularly due to the impact of the pandemic, the "land finance" relied upon by local governments (acquiring fiscal funds through land sales) has gradually become ineffective. At this juncture, the real estate bubble and the local government debt crisis are resonating with each other, brewing a larger economic crisis. |
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