Policy Effectiveness on Foreign Direct Investment in Chinese Real Estate Sector between 2000 and 2014

Foreign Direct Investment in real estate (FDIRE) market has raised researchers attention when discuss economy and urban development. In China, FDIRE policy intervention closely follows the cycles of the real estate market in most countries. However, researchers stand on two opposite sides on policy effectiveness on foreign investment. This research is focused on whether FDIRE policies released by Chinese government really affected FDIRE inflow from 2000 to 2014. Firstly, according to review of FDIRE policy files, there were 17 restriction policies and 1 stimulation policy released in China between 2000 and 2014. Secondly, through P2 distance policy index, implementation degree of each policy is computed. Thirdly, policy index and control variables in panel data regressions of 25 provincial data show that FDIRE policies really influenced FDIRE inflow, and high policy implementation degree has negative effect on oversea capital inflow, because most policies are restriction rules. Thirdly, according to the regressions adding spatial dummy variables representing eastern, central and western China, eastern regions attracted more FDIRE than central and western provinces. However, policy effectiveness did not show significant difference among these three regions. Data limitation may be one reasons for this insignificant spatial result, therefore, more researches should be done to explore into this field in the future.