The Real Estate Boom
How property became the backbone of China's economy — and its greatest financial vulnerability.
Property at the Heart of Everything
No single sector reveals more about China's economic model — its achievements and its fragilities — than real estate. By 2020, property and related industries (construction, materials, furnishings, property services) accounted for an estimated 25-30% of China's GDP. Roughly 70% of household wealth was held in real estate, compared to about 30% in the United States. Land sales provided 30-40% of local government revenue. Real estate was simultaneously the economy's growth engine, households' savings vehicle, and local governments' fiscal base.
This concentration was the product of deliberate policy. In 1998, China privatized urban housing, allowing residents to buy apartments that had previously been allocated by work units. A mortgage market was created from scratch. Urban development became the primary vehicle for local economic growth and fiscal revenue, as local governments sold land-use rights to developers.
