Has China’s Housing Production Peaked?

Rogoff, Kenneth, and Yuanchen Yang

China’s real estate has been a key engine of its sustained economic expansion. This paper argues,
however, that even before the Covid-19 shock, a decades-long housing boom had given rise to
severe price misalignments and regional supply-demand mismatches, making an adjustment both
necessary and inevitable. We make use of newly available and updated data sources to analyze
supply-demand conditions in the fast-moving Chinese economy. The imbalances are then
compared to benchmarks from other economies. We conclude that the sector is quite vulnerable
to a sustained aggregate growth shock, such as Covid-19 might pose. In our baseline calibration,
using input-output tables and taking account of the very large footprint of housing construction
and real-estate related sectors, the adjustment to a decline in housing activity can easily trim a
cumulative 5-10 percent from the level of output (over a period of years).

Πηγή: ΝΒER

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