The historical political economy of Chinese housing regulation and price speculation.
DOI:
https://doi.org/10.47611/jsr.v11i4.1766Keywords:
Financialization, Speculation, Real Estate, Financial CrisisAbstract
This work posits that the current state of the Chinese real estate market is a result of its historical development of housing distribution and regulation, through a critical literature review embedded in a political economy analysis on China’s Three Red Line policy. The paper follows key transitory periods within Chinese socio political reform within the context of its housing sector, identifying several policy making decisions and structural shifts which contributed to its current environment that fosters exuberant speculation and the treatment of housing as a private commodity rather than public necessity. The Financial Crisis is employed as a case study on housing market failures, exploring the institutional role of Fannie Mae and Freddie Mac as well as the existence of a credit-speculation binary in the distribution of subprime mortgages. The economics of the interrelationship between speculative behaviors within markets and the ability to leverage debt is then studied and applied to a Chinese context, utilizing several examples including the Evergrande crisis and the Three Red Line policy to identify the underlying failures of the Chinese housing market.
Downloads
Metrics
References or Bibliography
Alexandri, Georgia. 2022. “Housing Financialisation: What Is It and Why Is It of Our Concern ?” ETERON, 23 June 2022, https://eteron.org/en/housing-financialisation/.
Almond, Douglas. 2014. “The Great Chinese Famine.” The Oxford Companion to the Economics of China, 2014, pp. 436–440., https://doi.org/10.1093/acprof:oso/9780199678204.003.0073.
Bhagat, Sanjai. 2017. “Mortgage Public Policies and the Financial Crisis.” Financial Crisis, Corporate Governance, and Bank Capital, 2017, pp. 12–23., https://doi.org/10.1017/9781316756669.003.
Bloomberg, Enda Curran. 2022. “Analysis | How China's Property Developers Got into Such a Mess.” The Washington Post, WP Company, 13 May 2022, https://www.washingtonpost.com/business/how-chinas-property-developers-got-into-such-a-mess/2022/05/12/98abbfa0-d254-11ec-886b-df76183d233f_story.html.
Broudehoux, Anne-Marie. 1994. “Neighborhood Regeneration in Beijing: An Overview Of Projects Implemented in the Inner City Since 1990.” McGill Minimum Cost Housing Group, 1994.
Bryman, Alan. 2008. Social Research Methods. Oxford University Press, 2008.
Chan, Dorothy. 2022. “China's 'Three Red Lines' Policy to Safeguard the Property Sector Isn't Working Yet.” SupChina, 13 June 2022, https://supchina.com/2022/06/13/chinas-three-red-lines-policy-to-safeguard-the-property-sector-isnt-working-yet/#:~:text=This%20policy%20is%20known%20as,must%20be%20less%20than%20100%25.
Chan, Raymond Kwok-hong, and Ming-sum Tsui. 1997. “Notions of the Welfare State in China Revisited.” International Social Work, vol. 40, no. 2, 1997, pp. 177–189., https://doi.org/10.1177/002087289704000205.
Corbae, Dean, and Erwan Quintin. 2013. “Leverage and the Foreclosure Crisis.” 2013, https://doi.org/10.3386/w19323.
Chen, Kehao. 2019. “China’s Real Estate Control Policies and Housing Price Fluctuations.” Proceedings of the 1st International Conference on Business, Economics, Management Science (BEMS 2019), 2019, https://doi.org/10.2991/bems-19.2019.65.
DeFusco, Anthony, et al. 2017. “Speculative Dynamics of Prices and Volume.” 2017, https://doi.org/10.3386/w23449.
E-House. 2019. “China Evergrande Group: Strategic Repositioning Toward a Sustainable Growth Mode.” E-House, 2019, https://doi.org/http://d1c25a6gwz7q5e.cloudfront.net/reports/2019-05-16-China-Evergrande-FINAL.pdf.
Elleman, Bruce A. 2015. “The Origins of The Open Door Policy in China.” International Competition in China, 1899-1991, 2015, pp. 21–36., https://doi.org/10.4324/9781315726724-9.
Gao, Zhenyu, et al. 2017. “Economic Consequences of Housing Speculation.” 2017, https://doi.org/10.3386/w26457.
Goddard, Jason G. 2022. “Evergrande and Real Estate Value Subjectivity.” Journal of Asia-Pacific Business, 2022, pp. 1–3., https://doi.org/10.1080/10599231.2022.2025641.
Hoskins, Peter. 2021. “Evergrande: China Property Giant Misses Debt Deadline.” BBC News, BBC, 9 Dec. 2021, https://www.bbc.com/news/business-58579833.
Huang, Youqin. 2004. “The Road to Homeownership: A Longitudinal Analysis of Tenure Transition in Urban China (1949-93).” International Journal of Urban and Regional Research, vol. 28, no. 4, 2004, pp. 774–795., https://doi.org/10.1111/j.0309-1317.2004.00551.x.
Hu, Zuliu, and Mohsin S. Khan. n.d. “Economic Issues 8 -- Why Is China Growing so Fast?” International Monetary Fund, https://www.imf.org/EXTERNAL/PUBS/FT/ISSUES8/INDEX.HTM.
Jiang, Shenzhe, et al. 2021. ``China's Housing Bubble, Infrastructure Investment, and Economic Growth.” International Economic Review, 2021, https://doi.org/10.1111/iere.12562.
Jiang, Yuan Yan. 2021. “Analysis on the Housing Bubble in China.” Proceedings of the 6th International Conference on Financial Innovation and Economic Development (ICFIED 2021), 2021, https://doi.org/10.2991/aebmr.k.210319.022.
Jones, Marc. 2021. “Evergrande and Other Chinese Property Giants Have Sizeable off-Balance Sheet Debt - Jpmorgan.” Reuters, Thomson Reuters, 7 Oct. 2021, https://www.reuters.com/business/finance/evergrande-other-chinese-property-giants-have-sizeable-off-balance-sheet-debt-2021-10-07/.
Jordà, Òscar, et al. 2014. “The Great Mortgaging: Housing Finance, Crises, and Business Cycles.” 2014, https://doi.org/10.3386/w20501.
Kinder, Tabby. 2022. “Evergrande Misses Deadline for $300bn Debt Restructuring Plan.” Subscribe to Read | Financial Times, Financial Times, 30 July 2022, https://www.ft.com/content/01f8a2c7-4ed1-487b-aada-ac5e2b5a9932.
Li, Jiaxin. 2022. “The Cause and Enlightenment of Evergrande's Debt Crisis .” Atlantis Press, 2022.
Li, Si-ming. 2011. “China's Housing Reform and Outcomes.” Housing Studies, vol. 27, no. 8, 2011, pp. 1213–1214., https://doi.org/10.1080/02673037.2012.617940.
Marquit, Miranda. 2022. “Fannie Mae and Freddie Mac.” Forbes, Forbes Magazine, 11 Feb. 2022, https://www.forbes.com/advisor/investing/fannie-mae-and-freddie-mac/.
McArthur, Colin, and Sarah Edelman. 2017. “The 2008 Housing Crisis.” American Progress, 13 Apr. 2017, https://www.americanprogress.org/article/2008-housing-crisis/#:~:text=The%20real%20causes%20of%20the,excessively%20risky%20and%20predatory%20products.
Mian, Atif, and Amir Sufi. 2018. “Credit Supply and Housing Speculation.” 2018, https://doi.org/10.3386/w24823.
Popa, Mircea. 2013. “The Political Causes of Real Estate Bubbles.” Yale Publications, 2013.
Ramintas, Mc Dowell. 2022. “More Defaults Await China's Developers after Policy Crackdown, Says S&P.” S&P Global, 7 Apr. 2022, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/more-defaults-await-china-s-developers-after-policy-crackdown-says-s-p-69707324.
W., Zarathustra. 2011. “China: The Forgotten Real Estate Bubble of the 1990s.” Business Insider, Business Insider, 23 Mar. 2011, https://www.businessinsider.com/china-the-forgotten-real-estate-bubble-in-1990s-2011-3.
Waldron, Richard. 2018. “Capitalizing on the State: The Political Economy of Real Estate Investment Trusts and the ‘Resolution’ of the Crisis.” Geoforum, vol. 90, 2018, pp. 206–218., https://doi.org/10.1016/j.geoforum.2018.02.014.
Zhou, Min, and John R. Logan. N.d. “Market Transition and the Commodification of Housing in Urban China.” The New Chinese City, pp. 135–152., https://doi.org/10.1002/9780470712863.ch9.
Published
How to Cite
Issue
Section
Copyright (c) 2022 Adit Jacob; Suraj Nair
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright holder(s) granted JSR a perpetual, non-exclusive license to distriute & display this article.
