The Global Financial Crisis (2007-2008), which began due to the collapse of the U.S. housing market, had a negative effect in many regions across the globe. The global recession which followed the crisis in 2008 and 2009 showed how interdependent and synchronized many of the world's economies had become, with the largest advanced economies showing very similar patterns of negative GDP growth during the crisis. Among the largest emerging economies (commonly referred to as the 'E7'), however, a different pattern emerged, with some countries avoiding a recession altogether. Some commentators have particularly pointed to 2008-2009 as the moment in which China emerged on the world stage as an economic superpower and a key driver of global economic growth. The Great Recession in the developing world While some countries, such as Russia, Mexico, and Turkey, experienced severe recessions due to their connections to the United States and Europe, others such as China, India, and Indonesia managed to record significant economic growth during the period. This can be partly explained by the decoupling from western financial systems which these countries undertook following the Asian financial crises of 1997, making many Asian nations more wary of opening their countries to 'hot money' from other countries. Other likely explanations of this trend are that these countries have large domestic economies which are not entirely reliant on the advanced economies, that their export sectors produce goods which are inelastic (meaning they are still bought during recessions), and that the Chinese economic stimulus worth almost 600 billion U.S. dollars in 2008/2009 increased growth in the region.

Moderate rising of house prices are beneficial to the economic development. However, over high house prices worsen the economic distortions and thus hinder the development of the real economy. We use the stochastic frontier models to calculate the fundamental value in the housing in Chinese large and medium cities, and then obtain indexes which could measure the house prices’ deviations from the fundamental value. With the macroeconomic data in the city-level, this paper empirically investigates the effects of the house prices’ deviations on macro-economic variables like consumption, investment and output. The study reveals that the housing bubble exists in most Chinese cities, and first-tier cities fare the worst. House prices over the fundamental value, which could increase the scale of real estate investment, bring adverse impacts on GDP, as it causes declining civilian consumption and discourages real economy’s investment and production. The encouragement and the discouragement on macroeconomy caused by house prices’ deviation from its basic value take turns to play a key role in the process of China’ eco-nomic growth. In the early stage of China’s economic growth, the encouragement effect predominates. As urbanization and industrialization gradually upgrade to a higher level, the discouragement effect takes charge.

This data package includes the underlying data files to replicate the data and charts presented in Why China's housing policies have failed, PIIE Working Paper 23-5.

If you use the data, please cite as: Huang, Tianlei. 2023. Why China's housing policies have failed. PIIE Working Paper 23-5. Washington, DC: Peterson Institute for International Economics.

China's housing prices have been growing nearly twice as fast as national income over the past decade, despite a high vacancy rate and a high rate of return to capital. This paper interprets China's housing boom as a rational bubble emerging naturally from its economic transition. The bubble arises because high capital returns driven by resource reallocation are not sustainable in the long run. Rational expectations of a strong future demand for alternative stores of value can thus induce currently productive agents to speculate in the housing market. Our model can quantitatively account for China's paradoxical housing boom.

Impacts of housing price’s deviation from the basic price on economic growth.

From the Summer of 2007 until the end of 2009 (at least), the world was gripped by a series of economic crises commonly known as the Global Financial Crisis (2007-2008) and the Great Recession (2008-2009). The financial crisis was triggered by the collapse of the U.S. housing market, which caused panic on Wall Street, the center of global finance in New York. Due to the outsized nature of the U.S. economy compared to other countries and particularly the centrality of U.S. finance for the world economy, the crisis spread quickly to other countries, affecting most regions across the globe. By 2009, global GDP growth was in negative territory, with international credit markets frozen, international trade contracting, and tens of millions of workers being made unemployed.

Global similarities, global differences

Since the 1980s, the world economy had entered a period of integration and globalization. This process particularly accelerated after the collapse of the Soviet Union ended the Cold War (1947-1991). This was the period of the 'Washington Consensus', whereby the U.S. and international institutions such as the World Bank and IMF promoted policies of economic liberalization across the globe. This increasing interdependence and openness to the global economy meant that when the crisis hit in 2007, many countries experienced the same issues. This is particularly evident in the synchronization of the recessions in the most advanced economies of the G7. Nevertheless, the aggregate global GDP number masks the important regional differences which occurred during the recession. While the more advanced economies of North America, Western Europe, and Japan were all hit hard, along with countries who are reliant on them for trade or finance, large emerging economies such as India and China bucked this trend. In particular, China's huge fiscal stimulus in 2008-2009 likely did much to prevent the global economy from sliding further into a depression. In 2009, while the United States' GDP sank to -2.6 percent, China's GDP, as reported by national authorities, was almost 10 percent.

Title: Firm-Level Analysis of Bubble Formation in Chinese Real Estate Equities Economic Modelling This study investigates evidence of bubble preponderance in China’s real estate sector and seeks to identify the main determinants of exuberance in the equity prices of listed developers, relative to their dividend-based fundamentals. In contrast to the focus on property prices and rents that characterizes prior research, we emphasize real estate equity prices and firm-specific metrics. This shift in perspective, and the corresponding use of a dividend-based proxy, separates speculative-driven bubbles from those linked to fundamentals and thus enables us to better interpret the nature of exuberance as well as assess the alignment—or misalignment—between prices and fundamentals. Our empirical examination, based on the equity prices of 25 publicly listed developers included in the BICHODVP Chinese benchmark real estate index, detects bubbles in developer equity prices as well as the presence of common bubble dynamics among BICHODVP index components. Additionally, by incorporating firm-specific characteristics and macroeconomic variables, we provide a more granular understanding of how company characteristics—especially corporate valuation multiples and leverage—interact with broader market and policy conditions to generate equity price bubbles in the real estate sector.

Moderate rising of house prices are beneficial to the economic development. However, over high house prices worsen the economic distortions and thus hinder the development of the real economy. We use the stochastic frontier models to calculate the fundamental value in the housing in Chinese large and medium cities, and then obtain indexes which could measure the house prices’ deviations from the fundamental value. With the macroeconomic data in the city-level, this paper empirically investigates the effects of the house prices’ deviations on macro-economic variables like consumption, investment and output. The study reveals that the housing bubble exists in most Chinese cities, and first-tier cities fare the worst. House prices over the fundamental value, which could increase the scale of real estate investment, bring adverse impacts on GDP, as it causes declining civilian consumption and discourages real economy’s investment and production. The encouragement and the discouragement on macroeconomy caused by house prices’ deviation from its basic value take turns to play a key role in the process of China’ eco-nomic growth. In the early stage of China’s economic growth, the encouragement effect predominates. As urbanization and industrialization gradually upgrade to a higher level, the discouragement effect takes charge.

Moderate rising of house prices are beneficial to the economic development. However, over high house prices worsen the economic distortions and thus hinder the development of the real economy. We use the stochastic frontier models to calculate the fundamental value in the housing in Chinese large and medium cities, and then obtain indexes which could measure the house prices’ deviations from the fundamental value. With the macroeconomic data in the city-level, this paper empirically investigates the effects of the house prices’ deviations on macro-economic variables like consumption, investment and output. The study reveals that the housing bubble exists in most Chinese cities, and first-tier cities fare the worst. House prices over the fundamental value, which could increase the scale of real estate investment, bring adverse impacts on GDP, as it causes declining civilian consumption and discourages real economy’s investment and production. The encouragement and the discouragement on macroeconomy caused by house prices’ deviation from its basic value take turns to play a key role in the process of China’ eco-nomic growth. In the early stage of China’s economic growth, the encouragement effect predominates. As urbanization and industrialization gradually upgrade to a higher level, the discouragement effect takes charge.

The global bubble film machinery market, valued at $118 million in 2025, is projected to experience robust growth, driven by increasing demand across diverse sectors. The Compound Annual Growth Rate (CAGR) of 4.4% from 2025 to 2033 indicates a steady expansion fueled by several key factors. The burgeoning e-commerce industry necessitates efficient packaging solutions, significantly boosting the demand for bubble film, and consequently, the machinery used in its production. Furthermore, the growth of the food and beverage, pharmaceuticals, and electronics industries contributes significantly to market expansion. These sectors require reliable and cost-effective packaging to ensure product protection and maintain quality during transportation and storage. The market segmentation reveals a preference for single-layer bubble film, followed by double- and triple-layer options, reflecting cost-benefit analyses in different applications. Technological advancements in bubble film machinery, including automation and increased production efficiency, are also contributing to market growth. Competition among established players like Guangdong Zhongrui Plastic Machinery Technology Co.,Ltd., Shanghai Shenmeng Machinery Equipment Co.,Ltd., and others drives innovation and competitive pricing. Geographic expansion, particularly in rapidly developing economies in Asia-Pacific, presents lucrative opportunities for market players. However, fluctuating raw material prices and increasing labor costs pose potential restraints on market growth. The forecast period of 2025-2033 suggests a continuous upward trajectory for the bubble film machinery market. The expanding global economy and the sustained emphasis on efficient packaging solutions across various industries will likely propel market growth beyond the projected figures. Factors like stricter regulations regarding packaging materials and a growing emphasis on sustainability will further influence market dynamics. Companies will need to focus on innovation, cost-efficiency, and sustainability to maintain a competitive edge. This includes developing machinery that optimizes resource utilization and minimizes environmental impact while providing high-quality production outputs. The continued growth in e-commerce and the ongoing demand for safe and effective packaging across various goods will remain fundamental drivers, shaping the future trajectory of this dynamic market.

Banquet Bubble Machine Market Outlook

The global banquet bubble machine market size was valued at approximately USD 1.2 billion in 2023 and is projected to reach an impressive USD 2.5 billion by 2032, growing at a Compound Annual Growth Rate (CAGR) of 8.2% during the forecast period. This substantial growth can be attributed to the rising demand for unique and captivating event experiences, advancements in bubble machine technology, and the increasing frequency of social and corporate gatherings.

One of the primary growth factors driving the banquet bubble machine market is the escalating trend of personalized and themed events. From weddings to corporate events, clients are increasingly seeking distinctive ways to entertain and engage their guests. Bubble machines offer a visually stunning and cost-effective solution that enhances the overall ambiance of various events. This growing consumer inclination towards creating memorable experiences is fostering the demand for innovative bubble machines. Additionally, the social media culture, where visually appealing events are often shared and promoted, further propels market growth.

Technological advancements in bubble machines are another significant contributor to market growth. The development of automatic bubble machines equipped with advanced features such as remote control operation, adjustable bubble sizes, and LED lights has broadened their application scope. These innovative machines offer ease of use and versatility, making them appealing to both event organizers and individual consumers. Furthermore, advancements in battery technology have resulted in longer-lasting, portable bubble machines, thereby expanding their usability in outdoor and remote locations.

The increasing number of corporate events and social gatherings worldwide is also augmenting the demand for banquet bubble machines. As the global economy recovers and businesses resume in-person meetings and celebrations, the event management industry witnesses a surge in activity. Corporate events, product launches, and trade shows are increasingly incorporating bubble machines to create an engaging and dynamic environment, thus driving the market growth. Additionally, the growing disposable income and changing lifestyle preferences of consumers contribute significantly to the rising popularity of bubble machines in personal events such as weddings and birthday parties.

From a regional perspective, North America and Europe are the dominant markets for banquet bubble machines, owing to the high frequency of social and corporate events in these regions. However, the Asia Pacific region is expected to witness the fastest growth rate during the forecast period. The rising middle-class population, increasing disposable income, and expanding event management industry in emerging economies such as China and India are key factors driving the market growth in the Asia Pacific. Additionally, the growing trend of destination weddings in exotic Asian locations further boosts the demand for bubble machines.

Product Type Analysis

The banquet bubble machine market is segmented into automatic bubble machines and manual bubble machines. Automatic bubble machines are witnessing a higher demand due to their ease of operation and efficiency. These machines are equipped with advanced features such as remote control, adjustable bubble output, and LED lights, which make them suitable for a wide range of applications. Event organizers prefer automatic bubble machines as they allow for seamless integration into event setups, providing consistent bubble production with minimal manual intervention. The convenience offered by automatic bubble machines is a significant factor contributing to their growing popularity.

Manual bubble machines, on the other hand, are typically favored for smaller, more intimate gatherings. These machines require manual operation, which can be ideal for events where the bubble output can be controlled by an individual. Manual bubble machines are often more affordable than their automatic counterparts, making them accessible to a broader audience. They are popular among hobbyists and small event organizers who seek an economical solution for adding a whimsical touch to their events. Despite the growing preference for automatic machines, manual bubble machines continue to hold a substantial share in the market, particularly in segments where cost-effectiveness is a priority.

Effects of house prices’ deviation from the fundamental prices on output.

Output responses to changes in house prices’ deviation from the fundamental prices.

Effects of house price’ deviation from the fundamental price on investment and consumption.

Impacts of housing price’s deviation from the basic price on real economic investment.

In 2024, Japan had an average inflation rate estimated at 2.74 percent, marking the highest rate of inflation in Japan in almost a decade. However, this figure was still very low compared to most other major economies, such as Japan's fellow G7 members, four of which had inflation rates around six or seven percent in 2023 due to the global inflation crisis. Why is Japan's inflation rate lower? There are a number of contributing factors to Japan's relatively low inflation rate, even during economic crises. Japan eased its Covid restrictions more slowly than most other major economies, this prevented post-pandemic consumer spending that may have driven inflation through supply chain issues caused by higher demand. As the majority of Japan's food and energy comes from overseas, and has done so for decades, the government has mechanisms in place to prevent energy and wheat prices from rising too quickly. Because of this, Japan was able to shield its private sector from many of the negative knock on effects from Russia's invasion of Ukraine, which had a significant impact on both sectors globally. Persistent deflation and national debt An additional factor that has eased the impact of inflation on Japan's economy is the fact that it experienced deflation before the pandemic. Deflation has been a persistent problem in Japan since the asset price bubble burst in 1992, and has been symptomatic of Japan's staggering national debt thereafter. For almost 30 years, a combination of quantitative easing, low interest rates (below 0.5 percent since 1995, and at -0.1% since 2016), and a lack of spending due to low wages and an aging population have combined to give Japan the highest national debt in the world in absolute terms, and second-highest debt in relation to its GDP, after Venezuela. Despite this soaring debt, Japan remains the fourth-largest economy in the world, behind the U.S., China, and Germany.

Considering the notable influence of traditional Confucian culture on China’s housing market, this study introduces an innovative index to quantify the magnitude of the real estate bubble within China, employing a familial generational iterative model. Utilizing rent-buy policy as a conceptual framework, our research constructs a difference-in-differences model to investigate the impact of macroeconomic policies on the housing bubble phenomenon. Empirical observations from 2022 reveal pronounced bubble dynamics in first and second-tier cities, while housing prices in third and fourth-tier cities, alongside select fifth-tier cities, exhibit a declining trend. On a national scale, apart from minor affordability observed during 2005–2007, no significant affordability was identified in other years, with the housing price bubble index demonstrating a downward trajectory from 2020 to 2022. Furthermore, the implementation of the rent-buy policy that equality the rights of renter and owner has directly influenced the housing market, notably mitigating the overall escalation of housing prices. Additional analysis indicates that the rent-and-buy policy has been more successful in curbing price hikes in newly constructed and smaller-sized housing units compared to second-hand and larger-scale properties.

This paper uses the test proposed by Generalized Supremum Augmented Dickey-Fuller to identify whether there are multiple bubbles in copper price. The empirical results show that base on market fundamentals, there are seven bubbles existed from January 1980 to March 2023. Through analyses, the first two bubbles can be explained by the demand from Japan by the industry concentration and persistent supply constraint. The third to sixth bubbles are mainly negatively impacted by the global financial crisis and growing demand of China. The last bubble is caused by the economic recovery from Covid-19. The logit regression has stated that aluminum price, copper production, all metals index and GDP have a positive impact on copper bubbles, while China’s copper imports and precious metals price negatively explains copper bubbles. The main contributions are the investigation of the copper price bubbles, its determinants and the different technique of GSADF to detect copper price bubbles. Furthermore, it provides helpful information for those investors to make reasonable investment decisions and thus, avoid potential price risk.

Unit root test results of each variable.

Selection of the optimal lag order.