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.