HOUSING PRICE RESTRICTION AND OVERCAPACITY: EVIDENCE FROM CHINA’S PROPERTY TAX PILOT POLICY

This study estimates the capacity utilization rate of China’s industrial enterprises from 2006 to 2013 and then examines the effect of the property tax pilot (PTP) policy on the capacity utilization rate of industrial enterprises in Chongqing, using the DID strategy. Mechanism analyses are also conducted from the production-side and consumption-side capacity utilization rates, as well as a heterogeneity analysis regarding the different degrees of inter-sectoral relevance. The findings show that the PTP policy has a significantly positive impact on the capacity utilization rate of industrial enterprises in Chongqing. This impact is mainly determined by the policy improving the production-side capacity utilization rate. The capacity utilization rate of those upstream industrial enterprises with high relevance to the real estate sector has been greatly improved since the introduction of the policy. However, a high degree of relevance cannot change the policy’s impact on the capacity utilization rate of downstream industrial enterprises.