The Impact of Land Use Policies and Housing Prices on Chinese GDP Since 2000 (Research Paper Sample)

The Impact of Land Use Policies and Housing Prices on Chinese GDP Since 2000 Student’s Name Institutional Affiliation Course Code and Name Instructor's Name and Title Assignment Due Date Introduction China’s economy has boomed in the past decades, becoming a central player in the global economy. With this growth, China is positioned as a manufacturer of products for the world, but has also charted unprecedented internal progress in terms of housing construction, leading to exponential economic expansion. The following paper will consider how the Chinese GDP relates to its housing prices, while considering the specific land use policies that underscore these results. This is important because these three factors are inextricably linked within land and housing issues in China. The research method will consist of secondary analysis of research regarding these interactions, which will be further elucidated through case studies in particular Chinese contexts, such as Guangzhou. To consider this topic, land use policies before 2000 will be briefly outlined, to understand the legacies of Mao’s rule in today’s state-controlled land usage regulation context. State policy and its land use impacts are researched, bringing forth the housing development ramifications for China, including its emphasis on urban development, renewal, and potential loss of farm land. Thereafter, the relationship between Chinese housing prices and its GDP are analysed. This includes its national GDP related to housing development and pricing. Through several case studies, these findings are cemented as policies with tangible implications across disparate regions of the vast nation. Finally, an assessment of this research leads to policy implications and recommendations for how China can balance its GDP growth ambitions with its housing prices and land usage. Description Land Use Policies Pre-2000 During Mao’s reign of China, land was distributed based on specific purposes, such as agricultural production or housing construction (Lin & Ho, 2005). For the past four decades now, the Chinese government has divided uses of land and its ownership rights, with a specialty market dedicated to commercial land usage, directly impacting housing development and pricing (Lin & Ho, 2005). Loss of farmland was a main outcome of this policy, which has been curbed recently (Lin & Ho, 2005). Nonetheless, land use and efficacy in distribution of land for various uses has been hindered by this policy (Lin & Ho, 2005). Thus, an ongoing legacy of state ownership remains in effect in China, though with the integration of a market emphasis. This has produced a complicated bureaucratic system with a top-down organizational structure (Ho & Lin, 2003). Primary and secondary markets for land use and their rights have thereby emerged from this system, while suffering from excessive regulation, corruption, and illegal uses of the land in question (Ho & Lin, 2003). Based on accessible data regarding the land markets, some available land remains dedicated for the purpose of housing, although allocation for uses other than agriculture have been slowed by regulation (Ho & Lin, 2003). The initial purpose of land markets was to effectively distribute land for housing and other construction, while protecting dedicated agricultural spaces (Ho & Lin, 2003). In the years before 2000, local governments, despite development investments, were forced to absorb fiscal deficits based on the liberalization of the Chinese economy and centralized planning of land usage (Su & Tao, 2016). The centralized development wave created infrastructure, including housing and parks, especially focusing on urbanization and urban renewal throughout the nation (Su & Tao, 2016). According to the 1996 comprehensive land survey, nearly 70% of China’s land use was dedicated to agricultural processes (Lin & Ho, 2003, p. 681). However, of this majority, only a small amount was used for active cultivation, with substantial farmland losses in recent decades in favour of urban and industrial land development (Lin & Ho, 2003). Therefore, through both the legacy of Mao and the ongoing land use restrictions and regulations that are highly controlled by the state, China has a distinct means of policing land usage, with disparate results. This produces complexity that does not necessarily positively bolster housing prices or its GDP, but instead creates bureaucratic issues which even hamper its ability to cultivate its maximum agricultural yield. Research from 2000 onwards exemplifies the legacy of these policies, prompting notable shifts as China’s market economy opens and expands into housing. State Policies and Land Use Impacts There is a direct link between China’s GDP and its national regulation of the uses of land. Since the Chinese Communist Party (CCP) still maintains strong oversight over land, even when used for private, commercial purposes, land is used variably as a means of diversified economic production (Rithmire, 2017). As such, “land [is] a key instrument of macroeconomic regulation” with the CCP controlling “the national land supply either to stimulate economic growth or to rein in an overheating economy” (Rithmire, 2017, p. 123). Thus, government use of land impacts private business, helping to concentrate land usage and economic power to those with government links (Rithmire, 2017). This directly damages the ability for less prominent land developers and economic parties to grow financially in the face of state-run vested interests. In essence, this differentiates China from other economic rivals. Without government-granted access, there can be no efficient and expansive access to a free or liberalized market relating to housing, since the land usage remains under strict control. The ability to purchase or use land is directly related to the overall Chinese economy, as prescribed and considered by the leaders of the state, as opposed to the freedom for entrepreneurs or other individuals to use land as they see fit. Therefore, the state policies of land use directly impact its economic results and potential. Land regulations in China produce inconsistent land use, both in terms of development projects and loss of agricultural farming zones (Chien, 2015). From 1999 to 2005, agricultural land loss has decreased overall, based on new preservation initiatives within these structures and markets (Chien, 2015). The CCP has also reconfigured measures of land usage through territorialisation processes, such as administering land quotas between disparate regions or developed on lands that are deemed as “marginal” or technically unusable (Chien, 2015, p. 65). Since 2000, land use has become contested and sales of land have increased rapidly, with unpredictable and uneven results (Xu et al., 2009). The state has shifted to a model of commodification and economic bolstering as opposed to other considerations when it comes to land use (Xu et al., 2009). Through the distinct state and market blend approach of land use and housing development, China does accumulate certain net positive results. For example, while government pricing of land and development might not be as astronomically high as its private ownership counterparts, state control bolsters employment, lowers taxation, and expands GDP as central benefits of this approach (Xu et al., 2009). Additionally, this approach to development, in which the state uses local state-owned banking firms, places more responsibility on local financial authorities and not the state or other local contexts, if any issues arise during the development process (Xu et al., 2009). Overall, housing development and land use becomes a vast means for accessing capital for the CCP, and thus the country’s overall metric of GDP (Xu et al., 2009). This further shores up issues in terms of supply and demand, which could otherwise become restrictive or financially problematic. The state considers spatial commodification as a means of growing capital accumulation for the country, thus bolstering the GDP (Xu et al., 2009). Housing Development Ramifications Urban China has emphatically embraced a neoliberal means of housing development and production (Wang et al., 2012). Market results expand and contract vis-a-vis the government policies in terms of land allocation and housing development (Wang et al., 2012). Imbalanced housing development and wealth inequity have increased based on the neoliberal approach to housing as a means of raising China’s GDP, especially in cities with major real estate development projects (Wang et al., 2012). Yi & Huang (2012) surveyed housing distribution, development, and consumption between 2000 and 2010. The researchers found that more housing was available on the market and used in this period compared to previous decades (and especially up through 2005) (Yi & Huang, 2014). However, inequities in terms of space distribution and localized availability remained key discrepancies (Yi & Huang, 2014). Inequality in housing was made complex due to the aforementioned government-controlled measures of land usage distribution and competing development initiatives (Yi & Huang, 2014). Recent housing privatization and development remains relatively low vis-a-vis China’s population density (Wu et al., 2020). Yet, housing development and privatization have bolstered Chinese GDP recently, with a notable upward trend post-2010 (Wu et al., 2020). Financial growth through housing allocation, and thus shifting patterns in land usage, are increasingly essential to China’s economic development plans (Wu et al., 2020). Thus, propelling the economy through housing allocation, instead of mortgage financialization, is a key approach to China’s GDP tactics (Wu et al., 2020). Unlike its Western counterparts, Chinese housing markets are subjected to state interventions...