Land supply patterns and the Chinese low consumption puzzle

Jian Cheng, Jiangmeng Zhao, Yating Dai and Yan Li

Structural Change and Economic Dynamics, 2024, vol. 69, issue C, 232-245

Abstract: The challenge of low consumption presents a complex development issue in China, one that has been insufficiently analyzed through the lens of land supply. This paper introduces a fresh perspective to the Chinese low consumption puzzle by shedding light on the constraints imposed by monopolistic/strategic land supply on the final consumption rate. Our findings reveal that China's distinctive land supply patterns systematically restrict consumption, as monopolistic land supply hinders total consumption by widening the share of government sector income and the urban-rural income gap. Additionally, strategic land supply curtails consumption by increasing the share of capital income and driving up housing prices. This study underscores the significance of land supply-side reforms in bolstering consumption, offering valuable policy insights for China and other transitioning economies.

Keywords: Land supply; Consumption; Monopolistic; Strategic; Income distribution (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:69:y:2024:i:c:p:232-245

DOI: 10.1016/j.strueco.2023.12.006

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