Research on the Influence of Real Estate Development on Private Investment: A Case Study of China
1
Institute of Management, Beijing Academy of Social Sciences, Beijing 100101, China
2
School of Economics, Ocean University of China, Qingdao 266100, China
3
Institute of Marine Development, Ocean University of China, Qingdao 266100, China
4
Faculty of Education and Social Work, University of Auckland, Auckland 1023, New Zealand
*
Author to whom correspondence should be addressed.
†
These authors contributed equally to this work.
Sustainability 2018, 10(8), 2659; https://doi.org/10.3390/su10082659
Received: 28 June 2018
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Revised: 19 July 2018
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Accepted: 25 July 2018
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Published: 28 July 2018
(This article belongs to the Special Issue Real Estate Economics, Management and Investments)
Private investment in China, as a developing country, is an important source of financing for Chinese SMEs (Small and Medium-Size Enterprises) and has played a major role in the development of the real economy. However, in 2016, the growth rate of private investment in China dropped from 10.18% to 3.17%, which had a significant impact on the real economy. At the same time, China’s real estate market has developed rapidly, attracting a large number of capital inflows. The relationship between real estate development and private investment in China is worth considering. This study first, theoretically analyzes the influence mechanism of real estate industry on private investment, pointing out that within a modest development range, the development of real estate industry can promote private investment through the industrial linkage, urbanization, and balance sheet effects, but when real estate is overdeveloped, it has an inhibitory effect on private investment through vampire effect, raising costs and reducing demand effect. In other words, real estate has different effects on private investment in different developmental periods. Therefore, there is a non-linear relationship between the two variables. Second, the relevant provincial panel data of 31 provinces in mainland China from 2003 to 2015 were selected. Using the dynamic panel system Generalized Method of Moments (GMM), this study estimated the correlation between real estate development and private investment. The empirical results showed that the development of the real estate industry has a significant impact on the level of private investment; the two showing an “inverted U-shaped” relationship. At present, in some provinces in China, the real estate industry has exceeded the inverted U-shaped threshold. To boost the vitality of private investment in promoting real economic growth, the development of the real estate industry should be restricted, and house prices should be properly regulated.
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Keywords:
private investment; real estate industry; system GMM; inverted U-shaped; dual attributes of real estate; house prices
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MDPI and ACS Style
Li, J.; Ji, J.; Guo, H.; Chen, L. Research on the Influence of Real Estate Development on Private Investment: A Case Study of China. Sustainability 2018, 10, 2659. https://doi.org/10.3390/su10082659
AMA Style
Li J, Ji J, Guo H, Chen L. Research on the Influence of Real Estate Development on Private Investment: A Case Study of China. Sustainability. 2018; 10(8):2659. https://doi.org/10.3390/su10082659
Chicago/Turabian StyleLi, Jiangtao, Jianyue Ji, Huiwen Guo, and Lei Chen. 2018. "Research on the Influence of Real Estate Development on Private Investment: A Case Study of China" Sustainability 10, no. 8: 2659. https://doi.org/10.3390/su10082659
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