The Influence Of National Macro-control On The Real Estate Market

Since marketization reform of Chinese housing industry in1998, Chinese central government and all level of local government try their best to improve and realize the marketization of Chinese real estate market step by step. With the advent of Chinese opening and reforming police, the Chinese housing market developed very quickly. Because Chinese housing market involved nonferrous metal industry, cement industry, appliances and other durable goods industry and mechanical industry, which benefit from the fast development of housing market a lot, therefore housing industry becomes the backbone of Chinese economy. To some extent, Chinese housing industry impetus the fast development of urbanization, improves the resident’s living level and motivate the development of Chinese economy. However during the past14years of fast development of residence industry, there are lots of problems in this industry. The most obvious one is the relative price of housing to average disposable revenue is becoming increasingly higher. Moreover, the supply of housing product did not march the needs of residents, which led to relative surplus of housing products. All in all, for one thing, the bubble of housing market is become bigger, for another, the supply of housing market become relative excess to the average disposable revenue of Chinese people, The ratio of housing vacancy remains quite high. Due to the special status of the real estate market in the Chinese economy, the high operating risk of the real estate industry resulted in the huge operational risks faced by the China’s real economy and financial sector, this is because the changes in real estate prices, for the one hand, affect the output of the related industry, investment in fixed assets and the total amount of consumption, resulting in the high volatility of GDP and the unemployment rate; for the other hand, changes in real estate prices influence balance sheet of banking sector through the credit channel, that is because Chinese banking sector’s income mainly comes from the difference between deposit and lending rates, that is loan is the largest business of China’s banking sector, but loans are distributed to the real estate market by about70%. Thus the degree of changes of real estate price will affect the banking sector’s balance sheet and profit level, once the real estate price goes up and down frequently, the Chinese banking sector will encounter great impact, making the systematic risk of banking sector becoming pretty higher, coupled with changes in the international economic cycle and the shift of domestic and foreign policy, which will most likely lead to financial crisis. At present, the situation of international economy as a whole is at the recession bottom phase, therefore the international and domestic economic situation is still, to some extent, unstable and complex. There are lots of problems in Chinese economy by itself, the development model of Chinese economy which is boosting by the real estate market and other fixed assets investment alone is no longer sustainable.At this background, the central government and all level of local governments is trying to restructure China’s economic and promulgated a series of macro-control policy in the real estate industry, which effectively inhibited the fast rising of housing prices. This article aims to analyzing the transmission mechanism through the recent introduction of macro-control policies to the real estate market, and then empirical analysis of the transmission mechanism through the national macro-control policy to the real estate market by the example of the Shanghai real estate market and the motivation effect of the real estate market to the real economy. Finally, I supplied some recommendations of macro-control police of the real estate market based on the theoretical analysis and empirical test results. In short, Chinese authority is very imperative to carry on the transition of Chinese economy, and the real estate industry must also be in-depth reformed. The national government at all levels must build a scientific and rational macro-control system, making the housing products to become quasi-public goods, which increases the disposable income of residence and boost domestic consumption, lead the consumption to play its due role in national economic development, and ultimately the Chinese economy can have a strong immune ability to avoid the external and internal shocks, and then has eternal power for development.