Financialization of Housing Production: Unveiling the Fake Equity in Urban China
研究中国住房生产中的虚假股权机制，基于110家上市开发商数据，揭示其规模、动机及系统性风险，对理解债务驱动的城市发展和金融稳定有重要参考。
Urban development has significantly driven rapid economic growth in China, with real estate developers and financial institutions playing a pivotal role. Operating within the framework of state governance, developers primarily rely on a highly financialized model characterized by extensive credit expansion and overborrowing. Amid the increasing financialization of housing production, this study focuses on one financial mechanism, fake equity, which is remarkably understudied. Its deceptive purpose—to conceal debt—underscores a significant gap in understanding its prevalence, motivations behind its creation, and consequences. Drawing on financial statement data from 110 publicly listed developers in China, this article reveals a consistently growing volume of fake equity. The analysis further demonstrates that top developers, leveraging their institutional advantages and scale, utilize fake equity more extensively than smaller developers. This article uniquely analyzes the structure and design of fake equity, examining how it navigates the regulatory framework to benefit developers and financial institutions. The findings underscore the structural role of fake equity in sustaining debt-reliant urban development, exposing its systemic risks and the broader implications for financial and urban development policies. By linking the financialization of housing production in China to global financialization trends, this research advances the discourse on speculative urbanism and financial crises. This study calls for a grounded, country-specific analysis of financial mechanisms, with particular attention to concealed and manipulative practices. It emphasizes the critical role of regulatory and institutional frameworks in uncovering these hidden dimensions. By adopting a localized analytical lens, the study then encourages more cross-national comparisons and contributes to a deeper understanding of housing provision, financial stability, and urban governance across diverse contexts.