Abstract
Explosive housing prices in major cities have created a great deal of new houses that are vacant, which is defined as oversupply. We use the matrix of the direct input coefficients of an input–output table to identify 13 of 36 Chinese industrial sectors as housing-related. We estimate Marginal q values by sector for 2001–2016; sectoral investment is explained by panel estimations based on Marginal q theory. The Marginal q investment elasticities of 13 housing-related industries, the remaining 23 industries, and all industries were 0.2412, 0.8539, and 0.6956 respectively. The housing price Granger explains the producer price index (PPI), and the PPI Granger explains the Marginal q values of the 36 industrial sectors. Overcapacity via overinvestment was evident in all 13 housing-related industrial sectors, including metal and cement, during the period of explosive housing prices.
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