The Long-Run Trend of Residential Investment in China

IMF Working Papers, December 7, 2018

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The Long-Run Trend of Residential Investment in China

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Bibliographic details

• Authors: Ding Ding, Weicheng Lian
• Published: December 7, 2018
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484385371.001

Summary findings

• The paper analyzes the fundamental drivers of China’s residential investment as a share of its GDP.
• Economic structural changes that led to rebalancing toward consumption were the key driver of the rising residential investment to GDP ratio in China.
• The decline in the growth contribution of residential investment reflects the projected somewhat slower pace of rebalancing going forward and the envisaged increases in labor costs due to demographic changes.
• Current level of residential investment: 9 percent of GDP.
• Pages: 17.

Projections and scenarios

• Projected moderation of residential investment from the current level of 9 percent of GDP to around 6 percent by 2024.
• Projected contribution of residential investment to real GDP growth: decline gradually from currently about half percent of GDP to slightly negative by 2024, barring policy intervention.

Drivers and mechanisms

• Primary driver identified: economic structural changes toward consumption (rebalancing).
• Secondary mechanism affecting future contribution: envisaged increases in labor costs due to demographic changes.
• Rebalancing pace influences the residential investment to GDP ratio and its growth contribution.

Implications for growth and policy

• Without policy intervention ("barring policy intervention"), residential investment’s positive contribution to real GDP growth is expected to turn slightly negative by 2024.
• Policy intervention would be required to alter the projected moderation and the decline in growth contribution.

Publication metadata (from source)

• Authors: Ding Ding, Weicheng Lian
• Date: December 7, 2018
• Series: Working Paper No. 2018/261
• Issue: 261
• DOI: https://doi.org/10.5089/9781484385371.001
• ISBN: 9781484385371
• ISSN: 1018-5941
• Stock No: WPIEA2018261

IMF Working Paper — "The Long-Run Trend of Residential Investment in China" by Ding Ding and Weicheng Lian (December 7, 2018).

Content in this bundle

• The Long-Run Trend of Residential Investment in China, WP/18/261, December 2018
  • The Long-Run Trend of Residential Investment in China, WP/18/261, December 2018 (Markdown version)
  • The Long-Run Trend of Residential Investment in China, WP/18/261, December 2018 (PDF)