Home • PRRES Inc. Journal • Read the Journal

The Impact of Housing Reform on Consumption, Investment and Industrial Growth: A Tale of Three Chinese Cities

Author/s: Sun Sheng Han, Peng Du

Date Published: 1/01/2004

Published in: Volume 10 - 2004 Issue 1 (pages 102 - 126)

Abstract

Housing reform has been a key component in China’s economic revitalization program, initiated by the late paramount leader Deng Xiaoping since 1978. By reforming the welfare housing system, the Chinese government aims for the removal of a burden (i.e. welfare housing) from state finances. At the same time, housing reform will stimulate changes in consumption, investment and related industrial sectors, and thus facilitate economic growth. This paper examines the impact of housing reform on consumption, investment and industrial growth in three Chinese cities. Research findings revealed that housing reform resulted in drastic changes in housing investment and growth of related industries. Self-raised capital became the main source of housing investment, while state investment declined considerably. Significant correlations were clearly discernible between housing investment and related industries. Nevertheless, the power of resident's consumption was a constraint against housing commercialisation. Further reforms to raise the level of effective demand for housing and to introduce various schemes in housing finance are critical for developing the China housing industry into an engine of economic growth.

Download Full Article

Download the Full Article PDF

14445921.2004.11104156.pdf 14445921.2004.11104156.pdf (580kB)

Keywords

China - Cities - Economic Growth - Housing Reform

References

  • Badcock, B. 1986. Land and housing policy in Chinese urban development: 1978–1986. Planning Perspectives, 1: 147–70.
  • Cai, D. R. (ed.) 1996. Study on the urban housing system reform in China. Changsha: Hunan Press.
  • Chiu, R. 1995. Commodification in Guangzhou’s housing system: analysts and evaluation. Third World Planning Review, 17 (3): 295–311.
  • Dipasquale, D. and Wheaton, W. C. 1996. Urban Economics and Real Estate Markets. Chapter 7: 155–81, Englewood Cliffs, NJ: Prentice Hall.
  • The Editorial Board of China’s Real Estate Market Yearjournal 1999. China’s Real Estate Market Yearjournal, Beijing: China Planning Press.
  • The Editorial Board of Shanghai Almanac 1992. Shanghai Almanac, Shanghai: Shanghai Almanac House.
  • The Editorial Board of the Selected Rules and Regulations on Housing Reform 1998. Selected Rules and Regulations on Housing, Beijing: China Construction Industry Press.
  • EBYSSEZ (The Editorial Board of the Yearjournal for Shenzhen Spacial Economic Zone 1989, Yearjournal for Shenzhen Spacial Economic, Beijing: China Statistics Press.
  • Ermisch, J. (ed.) 1990. Housing and the National Economy. Gower Publishing Company.
  • Gu, Y.A. and Colwell, P.F. 1996. Housing rent and occupational rank in Beijing and Shenyang, People’s Republic of China. Journal of Property Research, 14 (2): 133–43.
  • Han, S. S. 1998. Real estate development in China: a regional perspective. Journal of Real Estate Literature, 6 (2): 121–33.
  • Han, S. S. 2000. Shanghai: between state and market in urban transformation. Urban Studies, 37 (11): 2091–2112.
  • http://www.snweb.com/gb/hd/2000/06/12/n0612002.htm (Report on “Shanghai: adjustment of contribution to the Housing Provident Funds.”
  • Institution of Finance and Trade Economics (IFTE), Chinese Academy of Social Sciences (CASS) and Institute of Public Administration (IPA) (New York) 1996. China’s Urban Housing Reform, Beijing: Economy and Management Publishing House.
  • Kim, J. 1987. China’s current housing issues and policies. Journal of the American Planning Association, 53 (2): 220–26.
  • Kirkby, R. 1990. China, in: K. Mathey (ed.) Housing Policies in the Socialist Third World, London: Mansell.
  • Lee, J. 2000. From welfare housing to home ownership: the dilemma of China’s housing reform. Housing Studies, 15 (1): 61–76.
  • Lee, Y.F. 1988. The urban housing problem in China. The China Quarterly, 115: 387–407.
  • Li, S.M. 2000. Housing consumption in urban China: a comparative study of Beijing and Guangzhou. Environment and Planning A, 32: 1115–34.
  • Lim, G.C. and Lee, M.H. 1993. Housing consumption in urban China. Journal of Real Estate Finance and Economics, 6: 89–100.
  • Mei, Sheng. 1999. How to assess China’s housing industry. Real Estate Periodical, 2: 35–7.
  • Rosen, K. T. and Ross, M. C. 2000. Increasing home ownership in urban China: notes on the problem of affordability. Housing Studies, 15 (1): 77–88.
  • Shanghai Statistical Bureau 1999. Shanghai Statistical Yearjournal 1999. Beijing: China Statistics Press.
  • Shenzhen Statistics and Information Bureau 1988, 1990, 1992–2000. Shenzhen Statistical Yearjournal 1988; 1990; 1992–2000. Beijing: China Statistics Press.
  • SCOSConRHS, State Council’s Office of the Steering Committee on the Reform of the Housing System. 1992. Selected collection of the plans and regulations on housing system reform. Beijing: China International Broadcasting Press.
  • State Statistical Bureau. 1998. China Statistical Yearjournal, 1988, Beijing: China Statistics Press.
  • State Statistical Bureau. 1999. China Statistical Abstract. 1999. Beijing: China Statistics Press.
  • State Statistical Bureau. 2000. China Statistical Abstract. 2000. Beijing: China Statistics Press.
  • Wang, Y.P. and Murie, A. 1996. The process of commercialisation of urban housing in China. Urban Studies, 33 (6).
  • Wang, Y.P. and Murie, A. 1999. Commercial housing in urban China. Urban Studies, 36 (9): 1475–94.
  • Woodfield, A. 1989. Housing and Economic Adjustment. New York: Taylor & Francis.
  • World Bank. 1992. China: implementation options for urban housing reform-a World Bank country study. Washington, DC: The World Bank.
  • Yan, X.W. and Marans R.W. 1995. Perception of housing in Beijing. Third World Planning Review, 17(1): 19–39.
  • Yantai Statistical Bureau. 1986–2000. Yantai Statistics Yearjournal. 1986–2000. Beijing: China Statistics Press.
  • Yuan, Shiming. 1998. Evaluation of urban housing reform. In Yanyui Wu and Qing Ye, (eds.) China’ reform and economic growth: problems and prospects, Australia: NCDS Asia Pacific Press.
  • Zhou, Min. and Logan, J.R. 1996. Market transition and the co modification of housing in urban China. International Journal of Urban and Regional Research, 20(3): 400–421.