A Time-Series Regression Analysis on the Relationship between Real Estate and Economic Growth in Beijing
|Georgic, Will Cameron
|The final model ensures the idea that real estate variables are significantly correlated with GDP growth in Beijing. House pricing and real estate related services are indeed factors associated with GDP growth. The government policies restricting policies housing trade is affecting GDP growth. The regression results support the idea that a raise in real estate prices is correlated with the growth in GDP. However, increasing real estate prices are not always having a good outcome. It is hurting the economic growth in the long-term perspective. Several economists have predicted the collapse of asset prices in China. The primary reason is the unregulated loans given by Chinese banks which will result in a recession. Steps to boost the domestic demand of the Chinese population have to be taken by the Chines leaders. China's economy has an active consumer market which allows China to rely less on the exports and diversifying to other markets. This means that the nation should rely less on companies owned by the states and rely more on private owned companies to be in a competitive environment. President Xi came up with a 2025 economic plan which prioritizing industries like clean-energy, advanced technology, aircraft engine, and big data (National Bureau of Statistics of China, 2014.) Raising prices in the real estate market would result in a lack of innovation power since most of the people chose to invest in housing. People put money into real estate that could otherwise go to newly established firms or industrial frontiers. With a lack of money support, firms may find it hard to survive. Also, overly investing in the real estate market will result in an asset bubble. The asset bubble will not only increase the stress of young adults and also increase the chance of potential recession. For further research, studying the real estate cycle of China will be more accurate in showing what exactly happened in China's economic growth.
|Kalamazoo College Economics and Business Senior Individualized Projects Collection
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|A Time-Series Regression Analysis on the Relationship between Real Estate and Economic Growth in Beijing