The Long-Run Trend of Residential Investment in China

December 7, 2018

Preview Citation

Format: Chicago

Ding Ding, and Weicheng Lian. The Long-Run Trend of Residential Investment in China, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Consumption, Housing, Housing prices

Keywords: GDP ratio, Housing investment, Investment boom, Investment dynamics, Investment instrument, Residential investment, WP

Publication Details

Pages:

17
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/261
Stock No:

WPIEA2018261
ISBN:

9781484385371
ISSN:

1018-5941

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