The Economy of Real Estate in China Essay Example | Topics and Well Written Essays - 3500 words

The Economy of Real Estate in China - Essay Example The current situation of real estate market in China is strongly linked to changes implemented in government policies. Regulators have also suggested that the short history of the real estate market in the country and the absence of investment options have resulted in the irrational enthusiasm currently witnessed. Prior to 1998, the government controlled the distribution of property while the real estate market itself participated only in secondary roles in â€Å"dual tracks† systems involving both market mechanics and government control (Shen & Liu 121). However, the rapid growth in the 21st century was also accompanied by numerous underlying problems, prompting the central government to implement measures that imposed restrictions such as checking interest rates and increasing deposits, especially in the commercial and residential categories. The current situation is characterized by high prices of housing, which is made worse by the sustained growth of the fundamentals of e conomics. This paper will analyze the economic issues in China and specifically focus on the real estate market. China shifted from a state-controlled to a market-centered economy in the 1980s. That move placed the country on a highly unprecedented economic growth path. This further led to more momentum in the 1990s after the privatization of the housing industry and the coming into existence of the property market and elimination of the work unit system. The scale of this change and the ensuing repercussions are key factors in the analysis of the economic growth in China. Further, data from the International Monetary Fund (IMF) reports that while real estate contributed only five percent of China’s GDP in 2000, it had grown to the current 15% by 2012 (Wang, Zan & Hongyu 44).