《《Changes in Real Estate Investment in》.pdfVIP

may–june 2011 59 The Chinese economy, vol. 44, no. 3, May–June 2011, pp. 59–70. © 2011 M.E. Sharpe, Inc. All rights reserved. ISSN 1097–1475/2011 $9.50 + 0.00. DOI 10.2753/CES1097-1475440304 Lubanski Lam Changes in Real Estate Investment in China After the Financial Tsunami Abstract: This article examines the measures taken by the Chinese government in the real estate sector from 2005 to the first quarter of 2009 in order to get a better understanding of related policy developments. a multivariate regression analysis was performed to determine the effect of such measures, especially credit control, on growing real estate development investments after the financial tsunami. The results indicate that adjusting the money supply in order to influence interest rates could be more effective than long-term measures such as land supply or administrative policies. Importantly, the study concludes that interest rates are market measures that allow the economy to adjust more freely without building up bubbles again, as opposed to mandatory and interventionist government policies. After the financial tsunami in late 2008, the Chinese government attempted to sta- bilize the economy through macromeasures. The ultimate aim was to maintain real economic growth at 8 percent and to prevent a recession. In general, the real estate sector accounts for about 10 percent of China’s gross domestic product (GDP) and therefore is a major component of the nation’s economy. Thus, the government’s measures in this specific sector would be a major factor in stabilizing a potentially endangered economy. Zhang (2008) pointed out that government intervention in the housing land market was intense in most countries and such intervention could be carried out through two channels: land supply and urban planning. In his study, Zhang set the real estate price as a dependent variable and a respo