The Long-Run Trend of Residential Investment in China

18 Pages Posted: 14 Jan 2019

See all articles by Ding Ding

Ding Ding

International Monetary Fund

Weicheng Lian

International Monetary Fund (IMF)

Date Written: December 2018

Abstract

In this paper we analyze the fundamental drivers of China's residential investment as a share of its GDP. Our analysis indicates that the economic structural changes that led to rebalancing toward consumption were the key driver of the rising residential investment to GDP ratio in China. We project that residential investment would moderate from the current level of 9 percent of GDP to around 6 percent by 2024, and its contribution to real GDP growth would decline gradually from currently about half percent of GDP to slightly negative over this period, barring policy intervention. The decline in the growth contribution of residential investment reflects the projected somewhat slower pace of rebalancing going forward and the envisaged increases in labor costs due to demographic changes.

Keywords: Asia and Pacific, China, People's Republic of, Central banks and their policies, China housing market, residential investment, rebalancing, Bayesian Analysis, Time-Series Models, Monetary Policy (Targets, Instruments, and Effects)

JEL Classification: C11, C32, E43, E52, E58, F32, R31

Suggested Citation

Ding, Ding and Lian, Weicheng, The Long-Run Trend of Residential Investment in China (December 2018). IMF Working Paper No. 18/261. Available at SSRN: https://ssrn.com/abstract=3314594

Ding Ding (Contact Author)

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Weicheng Lian

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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