Housing Boom, Dutch Disease, and the Decline in China's Manufacturing Exports

Abstract

Drawing on Dutch disease theory, we assess how the recent housing boom has contributed to a decline in China's manufacturing exports. Using Chinese city and enterprise panel data from 2004 to 2013, our analysis reveals that Dutch disease indeed exists and that the housing price increase has played a very important role in affecting China's manufacturing exports through two key channels: resource movement eff ect and spending eff ect. Specifi cally, this paper found that: (i) the housing price increase hindered labor flowing into China's manufacturing industry (resource movement effect) and caused higher inflation (spending effect); (ii) the housing boom clearly impeded China's manufacturing exports, especially after the outbreak of the global economic crisis in 2008;(iii) the impacts of the housing price increase on China's manufacturing exports were heterogenous, and were more significant for labor-intensive manufacturing businesses, businesses that were foreign owned, less R&D intensive, or located in the central and western regions.

Impact of Chinese Local Government‐led Construction Land Supply Strategies on Urban Innovation and its Spatiotemporal Differences

“…The price of residential land also increases, pushing up housing prices and thus creating an obstacle to the infl ow of labor, which is detrimental to further development of the industrial base (Liu and Tong, 2023).…”

“…One is the inhibiting eff ect on the innovation willingness of talent. The increase in housing prices infl uences employment choices and investment behavior preferences (Liu and Tong, 2023). In terms of employment choices, to pay for high housing costs, individuals in the talent pool are often unwilling to pursue innovative and entrepreneurial jobs with high risks and low returns and are more inclined to pursue high-paying jobs, such as those in the fi elds of real estate and fi nance.…”