Page 23 - THE SOUTH CHINA BUSINESS JOURNAL
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estments and the decline in credit to non-land-holding firms, researchers estimate that a 1%
increase in overall land price led to a 26% loss in firm productivity across all sampled firms.
Falling land prices trigger reverse trends. When the central government introduced measures to
cool the property market in 2010 by restricting housing purchases, researchers observed a reversal
of trends. While rising land prices induced firms to shift toward speculative investments in land,
falling land prices caused by the purchase restriction policy induced firms to switch back to non-land
investments, which in turn directly benefited firms’ core businesses and patenting activities.
Land prices affect investment, patenting, and productivity beyond the property sector. The research
confirms that fluctuations in China’s property market affect firms well beyond the real estate sector.
Rising land prices induce inefficiency by disproportionately channeling asset growth and credit to land-
holding firms — often SOEs — that spend speculatively rather than to more efficient, non-land-holding
firms, which are often privately owned. Negative shocks to the real estate market cause both state-
owned and private firms in a broad cross-section of sectors to invest less but more prudently.
Land prices in 330 sampled cities, 2004–2015 Firm investments, 2000–2015
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Dispute Resolution SOUTH CHINA BUSINESS JOURNAL 20
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increase in overall land price led to a 26% loss in firm productivity across all sampled firms.
Falling land prices trigger reverse trends. When the central government introduced measures to
cool the property market in 2010 by restricting housing purchases, researchers observed a reversal
of trends. While rising land prices induced firms to shift toward speculative investments in land,
falling land prices caused by the purchase restriction policy induced firms to switch back to non-land
investments, which in turn directly benefited firms’ core businesses and patenting activities.
Land prices affect investment, patenting, and productivity beyond the property sector. The research
confirms that fluctuations in China’s property market affect firms well beyond the real estate sector.
Rising land prices induce inefficiency by disproportionately channeling asset growth and credit to land-
holding firms — often SOEs — that spend speculatively rather than to more efficient, non-land-holding
firms, which are often privately owned. Negative shocks to the real estate market cause both state-
owned and private firms in a broad cross-section of sectors to invest less but more prudently.
Land prices in 330 sampled cities, 2004–2015 Firm investments, 2000–2015
BAKER MCKENZIE IN CHINA
Beijing Shanghai Hong Kong Baker McKenzie FenXun (FTZ) Joint Operation
Since 1993 Since 2003 Since 1974 Since 2015
World’s leading China legal platform, delivering integrated international
and PRC legal services
Our Breadth of Expertise
PRACTICES INDUSTRIES World’s strongest legal brand
Consumer Goods for the 12th year in a row -
Aircraft Leasing & Investment Funds Thomson Reuters
and Retails
Finance Intellectual Property Energy, Mining 74 offices in 45 jurisdictions
globally
Antitrust & Competition International Trade and Infrastructure
Insurance Nearly 50 years’ history in China
Banking & Finance Mergers & Acquisitions Industrial,
One of the largest and most
Capital Markets Private Equity Manufacturing experienced international law firms
and Transportation in China, with over 300 qualified
Compliance & Real Estate Pharmaceutical lawyers and consultants
and Healthcare
Regulatory Tax & Customs Technology, Media and Established the 1st Joint
Telecommunications Operation Platform with
Corporate Services Wealth Management FenXun in China
Dispute Resolution SOUTH CHINA BUSINESS JOURNAL 20
Employment &
Immigration
Financial Services
www.bakermckenzie.com
www.bakermckenziefenxun.com
www.fenxunlaw.com
