People’s Real Estate Markets: From Land-Based Economy to Factor Market Initiatives

People’s Real Estate follows the collapse of China’s land-based growth model and the policy response now underway. The case traces four stages of the property market, from the 1998 abolition of welfare housing through the debt-fuelled developer boom of the 2010s to the demographic and financial reckoning of the 2020s, showing how a fiscal mechanism that built modern urban China for two decades ran structurally out of road.
The case then turns to the reform the central government has proposed in response: “factor marketisation,” a set of ten pilot programmes asking cities to open land, labour, capital, technology, data, and energy to market forces in place of the old land-fiscal engine. It frames this reform as a three-player political economy problem, involving the central government (which wants efficiency), local governments (which need cash and career security), and the private sector (which needs credible commitment), and closes with a structured group exercise in which student teams, each representing one of ten actual pilot cities, must choose a reform strategy and defend a factor-by-factor plan to a simulated mayor.

Upon completion of this case, students will be able to:
•Explain the fiscal mechanics of China’s land-based growth model, why local governments became dependent on land sales, and how that dependency produced the debt and leverage risks that later surfaced.
•Distinguish a structural decline from a cyclical one, using the land-revenue collapse, developer defaults, and demographic data in the case to argue why the old model cannot simply be revived.
•Analyse a multi-party reform problem using a three-player framework (central government, local governments, and the private sector), identifying where each party’s incentives align and where they conflict.
•Evaluate competing reform strategies for their trade-offs rather than searching for a single correct answer, recognising that the right strategy depends on a city’s specific fiscal position, industrial base, and political standing.
•Construct and defend a factor-by-factor policy recommendation (land, labour, capital, technology, data, and energy) for a specific city, using consistent criteria rather than an undifferentiated stance.
•Articulate why credible commitment, not just good policy design, determines whether market-oriented reforms succeed in a system built on political and fiscal discretion.