The Impact of China's Financial Policies on the Real Estate Industry and Suggestions - A Case Study of Evergrande Group

Abstract

Real estate industry is important for every county, because is linked to the country's economic prosperity, social stability and people's happiness. In recent years, a severe problem with real estate in China has been that some speculators have used media propaganda to encourage people to buy houses, raise prices by changing the structure of supply and demand, and then turn around and make a profit. In order to curb this phenomenon, China has proposed the "Three Red Lines" policy. With this policy, the Chinese government hopes to curb excesses in the real estate market, thereby stabilizing housing prices and enhancing the well-being of its people. In order to assess the effectiveness of this policy, this paper will use both literature analysis and case study methodology to firstly assess the impact of this policy on real estate and analyze its problems. On this basis, Evergrande Group is selected as a research case to point out the drawbacks of the current policy based on the principles of behavioral finance. On this basis, based on the literature and our own experience, we put forward corresponding suggestions. The aim of this paper is to reveal the problems of existing policies and provide suggestions for the sustainable development of China's financial industry.