THE GROWING INFLUENCE OF CHINA ON THE G7 REAL ESTATE MARKETS (A COMPARATIVE STUDY WITH THE UNITED STATES OF AMERICA)

Abstract

The world today is smaller than ever due to technological advances. This led to the increased the fragility of a country's economy due to events happening in other parts of the world. We have seen the how the Global Financial Crisis in 2008, and more recently BREXIT and Trump's presidency, shook the economies all around the world. This paper looks to investigate how the United States of America (US) and China's indicators will impact our most advanced economies, the G7 members. By looking at certain popular macroeconomic indicators and economic policy uncertainty, the paper will examine the causality and predictability on the G7 real estate market. The results show that the US still have a larger influence on the G7 members as compared to China. Furthermore, it is shown that different G7 markets have different sensitivity to the various indicators. However, this paper went one step further and conducted a sub-period analysis. The data were sub-divided into three sub-periods over the years namely: Inter-crisis period, Crisis period and Post-Crisis period. The result, in this case, shows that China has a stronger influence on the G7 during times of crisis, while the US influence remains unchanged during different periods. Overall, it was concluded the US still has the stronger influential power on the G7 markets despite China's rapid progress over the last decade. China's influence emerged only during the crisis period, in which the US was indifferent despite different economic situations.