Research on the Influence of Housing Prices on the Economic Performance of Chinese Real Enterprises

Abstract

According to the Report of the 20th National Congress of the Communist Party of China, with importance of developing China’s real economy has become increasingly prominent, the economic development should focus on the real economy. Moreover, the various impacts brought by housing price changes in recent years are also intertwined with the sustained and superior economic development in China. With this context in mind, this paper uses panel data of housing prices and real enterprise performance in 30 major Chinese provinces and cities from 2005 to 2020—aside from Hong Kong, Macao, Taiwan, and Xizang—to empirically test the relationship between housing prices and the economic performance of real enterprises in China. The findings indicate that there is a nonlinear link between housing prices and real firms' economic performance and that excessively high housing prices are detrimental to real companies' ability to function economically. Further investigation employing heterogeneity analysis reveals that the limitation of exorbitant housing prices has a greater impact on entity companies in China's west and center.