A Study On Increasing House Price On Manufacturing Survival

Since the cancellation of the welfare housing system in 1998,the housing price in China has shown a rapid upward trend,most of real estate companies gain huge profits.However,there is a sharp contrast between the rising housing prices and the manufacturing industry.Because of the downturn global economic,the “demographic dividend” gradually disappears,while the labor cost continues to rise,and the prices of land and other factors keep rising.These all have inevitably led to an increase on the costs of domestic production.The profits of the manufacturing enterprises have been indefinitely depressed.The traditional manufacturing industry in China has encountered bottlenecks.Taking Zhejiang Province as an example,this paper uses the Cox Proportional Hazard Model to dynamically track the manufacturing enterprises that have entered the market since 2008 and conducted an empirical analysis.This paper studies the impact of rising house prices on the survival of manufacturing enterprises in both theoretical and empirical aspects.Firstly,this paper uses descriptive statistical methods to do the research on the current situation of real estate industry and manufacturing industry in Zhejiang Province.It finds out that the scale of real estate is increasing,the investment income is high and the house price is rising obviously,while the manufacturing scale is decreasing,the investment growth rate is slowing down and the income is falling obviously.Secondly,it analyzes the principles of the predecessors that how the rising housing prices has impacted the survival of manufacturing enterprises.Finally,this paper uses the Cox Proportional Hazard Model for the housing prices and the survival of manufacturing enterprises.This paper conducts several empirically analyzes by the overall data,different manufacturing industries and different grades of cities data.To have a clearer display,this paper combines Kaplan Meier method to show the dynamic evolution process of how the rising housing price impact on the survival of manufacturing enterprises.The conclusions of this paper are as follows:(1)From the results of empirical regression in Zhejiang Province,the rise in housing prices plays a positive role in promoting the survival of manufacturing enterprises overall.The hazard function shows that the impact of rising house prices on the survival of manufacturing enterprises shows a “reverse U” type.After the house price increasing rate reaches the“threshold value”,the promotion effect will gradually weaken and tends to zero.(2)By the regression of different manufacturing industries,it shows that it has a more significant effect on the survival of manufacturing enterprises who have a backward linkage to the real estate industry.(3)The empirical results show that the rising housing prices has promoted the development of the three levels,but the higher the level,the higher the risk is.Based on the above research and analysis,this paper proposes the following policy as recommendations: Curb the irrational rise in house prices and squeeze out speculators in the real estate market.And differential real estate loan interest rates will be implemented for the same people.Respond to the real estate classification and policy of different manufacturing industries and cities,and avoid the “one size fits all”real estate policy.