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A Tale of Tier 3 Cities

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  • Mr. Kenneth Rogoff
  • Yuanchen Yang

Abstract

This paper provides new estimates of the housing stock, construction rates and price developments by city tier in China in order to understand where imbalances might be concentrated, and the implications of any significant contraction. We also update estimates of the size of China’s rapidly evolving real estate sector through 2021, allowing one to look at the initial impact of COVID-19, as well as extending the analysis to incorporate urban-expansion related infrastructure construction. We argue that China overall faces imbalances between supply and demand for housing stock, but the problem is significantly deeper outside tier 1 cities.

Suggested Citation

  • Mr. Kenneth Rogoff & Yuanchen Yang, 2022. "A Tale of Tier 3 Cities," IMF Working Papers 2022/196, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/196
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    References listed on IDEAS

    as
    1. Hanming Fang & Quanlin Gu & Wei Xiong & Li-An Zhou, 2016. "Demystifying the Chinese Housing Boom," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 105-166.
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    3. Kaiji Chen & Yi Wen, 2017. "The Great Housing Boom of China," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(2), pages 73-114, April.
    4. Sun, Xiangdong & Yuan, Ouyang & Xu, Zhao & Yin, Yanhui & Liu, Qian & Wu, Ling, 2021. "Did Zipf's Law hold for Chinese cities and why? Evidence from multi-source data," Land Use Policy, Elsevier, vol. 106(C).
    5. Yongming Huang & Jamal Khan & Eric Girardin & Umair Shad, 2021. "The Role of the Real Estate Sector in the Structural Dynamics of the Chinese Economy: An Input–Output Analysis," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(1), pages 61-86, January.
    6. Arshad, Sidra & Hu, Shougeng & Ashraf, Badar Nadeem, 2018. "Zipf’s law and city size distribution: A survey of the literature and future research agenda," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 75-92.
    7. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, October.
    8. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 739-767.
    9. Kenneth Rogoff & Yuanchen Yang, 2021. "Has China's Housing Production Peaked?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(1), pages 1-31, January.
    10. Yuanchen Yang & Yangyang Liu, 2020. "Credit Expansion and Misallocation," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(4), pages 1-5.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chartbook #194 Can Beijing halt China’s housing avalanche? The most important economic-policy question for 2023?
      by Adam Tooze in Adam Tooze on 2023-02-05 21:37:56

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    More about this item

    Keywords

    China; Real Estate; Macro Economy; sector vulnerability; housing stock estimation; infrastructure construction; infrastructure investment; construction rate; Housing; Stocks; Infrastructure; Housing prices; Depreciation;
    All these keywords.

    JEL classification:

    • F39 - International Economics - - International Finance - - - Other
    • G01 - Financial Economics - - General - - - Financial Crises
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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