China's Construction Land Expansion and Economic Growth: A Capital‐output Ratio Based Analysis

Huizhong Li, Feng Yin and Jialun Li

China & World Economy, 2008, vol. 16, issue 6, 46-62

Abstract: Since 2003, the Chinese Government has been using land policy as an important macroeconomic policy. The present paper analyzes the impact of the expansion of construction land on economic growth in terms of the capital‐output ratio. Using provincial panel data for China from 1999 to 2005, we conclude that the excess expansion of China's construction land led to an increase in the capital‐output ratio. Therefore, expanding construction land has made little contribution to economic growth. This paper argues that contractionary land policy does not deter high economic growth, and is a necessary condition for a sustainable economic growth.

Date: 2008
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