Peak China Housing?

China’s real estate market has been a key engine of its sustained economic expansion. This paper argues, however, that even before the COVID-19 shock, a decades-long housing boom had given rise to price misalignments and regional supply-demand mismatches, making an adjustment both necessary and inevitable. Based on input-output analysis and benchmarking against other economies, we estimate the size of China’s real estate–related activities to be 29% of the economy and conclude that the sector is quite vulnerable to a sustained aggregate growth shock.

Book Synopsis Why Does China Need a New Breed of Companies?

Understanding corporate China and its future dynamics is the key to understanding the Chinese economy and its undergoing transformation. The intellectual framework proposed in this work can be summarized by a simple identity: Growth Rate = Return on Invested Capital (ROIC) X Investment Rate. To successfully achieve China’s economic transition without losing a lot of growth at the same time, China needs to improve ROIC at the aggregate level.

Shadow Banking Activities of Non-Financial Firms in China

The re-lending business is a particular activity of shadow banking in China, in which some non-financial firms borrow in order to lend, acting as de facto financial intermediaries. Julan Du and Chang Li from the Chinese University of Hong Kong and Yongqin Wang from Fudan University document this type of shadow banking in China using three different identification strategies. They also explore the factors that influence the firms' re-lending activities.

Air Pollution, Health Spending and Willingness to Pay for Clean Air in China

A study shows that reducing PM2.5 in China can lead to significant health benefit. A reduction of PM2.5 by 10 μg/m3 (about 20% from the current level) could result in an annual saving of 75 billion Yuan (or over 2%) in healthcare expenditure. The benefit from improved air quality proposed by recent national policies in China could justify large investment in cleanup activities.

Industry/Policy View Post-COVID-19 Reconfiguration of the Global Value Chains and China