What role does the real estate–construction sector play in China's regional economy?

Urbanization, industrialization and real estate reform have led to a vast growth of the real estate–construction sector in China. Using the 2002 and 2007 provincial input–output tables, this paper examines the importance of the real estate–construction sector in the Chinese economy by applying the hypothetical extraction method. The results show that for the 30 studied provinces, the weighted average impact of the real estate–construction sector accounts for 21% of total output and for approximately 14% of all jobs in 2002. For 2007, these figures are 23 and 22%, respectively. The impact of the real estate–construction sector on total output and employment varies across regions. In 2007, the direct and indirect output and employment of real estate–construction sector accounted for around 15% of total regional output and employment in Shandong and Henan, and for 40% in Tianjin, Jilin, Shaanxi, Ningxia and Xinjiang. Our results also indicate that the real estate–construction sector is strongly own final demand oriented and regional economies which highly rely on it are particularly vulnerable to a fall in its demand.