Will the real estate sector remain the driver of China's economic growth?
We've chosen and translated competing ideas on the future of China's economy & the role of the real estate sector from ten top Chinese economists

Editor's note:

China’s second largest property developer Evergrande made headlines in recent years for getting into a severe debt crisis, with liabilities of over US$300 billion. Evergrande is just one example of risks in China’s highly leveraged property sector,a sector which once performed as China’s economic engine.

In just a few decades, the immense size and speed of China’s urbanization have exceeded the boldest predictions of the reformers who initiated it. The big shift in China’s urbanization policies came in the late 1980s, when the model of financing China’s industrialization and urbanization through agricultural accumulation was determined to be unsustainable.

This led to China’s 1994 tax sharing reform, which gave local governments the initial incentives to develop a “land finance system, which later led to China’s real estate boom. This reform adjusted the tax distribution between the central and local governments, so that local governments were able to accumulate original capital at an unprecedented speed.

Without land finance, many of the problems of China’s economy, such as soaring housing price, wouldn’t have existed. On the other hand, China’s rapid development wouldn’t have occurred either, as “land finance” provided a much-needed funding solution for China in the 90s.

Against this backdrop, we debate this question:

Will the real estate sector remain the driver of China's economic growth?

  • Yes
Justin Yifu Lin

Director of the Institute of New Structural Econimics,
Peking University

" The real estate sector will continue to be the driver of China's economic growth. But in the coming years, housing will no longer be an asset for speculation, but rather an asset for living,which will make both the housing market and the economy much healthier."

"I think the Chinese government will find ways to support public housing, as we have seen in Singapore. There will certainly be significant investment in public housing, which will also spureconomie growth. "

Zhang Yuewen

Director of Capital Market Research Department, Institute
of Finance,Chinese Academy of Social Sciences

Xu Gao

Chief Economist of BOC Securities and Director of China Chief Economist Forum

Yin Yanlin

Chief Economist of BOC Securities and Director of China Chief Economist Forum

Deng Haiqing

Vice President and Chief Investment Officer of AVIC Fund

  • No
Shen Minggao

Guangfa Securities:China's economic growth driven
by real estate is unsustainable.

Xing Ziqiang

Chief Economist, Morgan Stanley China

Wang Tao

Chief China Economist,Head of Asia Economic Research,
UBS:Real estate will not be the most important engine of economic growth in the future.

Ding Shuang

Chief Economist of Greater China and North Asia, Standard Chartered Bank and Director of China Chief Economist Forum: “ Real estate investment will be less of a drag on the economy, but cannot yet become an engine of growth.”

Wang Xiaolu

deputy director and researcher of the National Economic Research Institute of China Reform Foundation and executive director of the China Society for Economic System Reform.