ABSTRACT
This paper is aimed at exploring whether high housing prices constitute a boon or a bane for entrepreneurship in Chinese cities. Drawing upon a panel dataset for Chinese cities at the prefectural level and above for the period 2003 to 2016, this paper identifies an inverted U-shape pattern of association between housing price and urban entrepreneurship. It also finds significant inter-city housing price spillovers in first-tier urban agglomerations in which a housing price surge in first-tier cities has an inverted U-shape relationship with entrepreneurship in surrounding cities. The empirical results of this study act as a reminder to Chinese policy makers to adopt a cautious and balanced attitude towards the development of the real estate market and have important policy implications for the planning and governance of mega urban agglomerations in China.
Notes
1. Cities in China are typically classified into four different tiers according to their administrative ranking and the level of economic development. However, depending on its purpose, the classification scheme may vary among real estate agents, government officials and academics. This study follows the schemes used by Glaeser et al. (Citation2017) and Fang et al. (Citation2015) in which tier 1 includes only the four most developed metropolitan areas: Beijing, Shanghai, Shenzhen and Guangzhou, and tier 2 includes 2 autonomous municipalities (Tianjin and Chongqing), most provincial capitals and 9 vital industrial and commercial centres.
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Yuhua Wang
Yuhua Wang is an associate professor in the College of Water Resources & Civil Engineering at China Agricultural University. Her research focuses on urban and regional development, industrial agglomeration, and town planning in China.
Fox Z.Y. Hu
Fox Z.Y. Hu is an associate professor at the Department of Asian and Policy Studies, The Education University of Hong Kong. His research interests include firm-region nexus in transitional economy, regional development and geographical political economy, urban land and housing policy with an area focus on China. His recent research projects include urban inequality, housing and entrepreneurship, as well as policy innovation in urban redevelopment.