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Towards a system of open cities in China: Home prices, FDI flows and air quality in 35 major cities

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  • Zheng, Siqi
  • Kahn, Matthew E.
  • Liu, Hongyu

Abstract

Over the last 30Â years, China's major cities have experienced significant income and population growth. Much of this growth has been fueled by urban production spurred by world demand. Using a unique cross-city panel data set, we test several hypotheses concerning the relationship between home prices, wages, foreign direct investment and ambient air pollution across major Chinese cities. Home prices are lower in cities with higher ambient pollution levels, and the marginal valuation for green amenities is rising over time. Cities featuring higher per-capita FDI flows have lower pollution levels. These findings may indicate that major Chinese cities are making the transition from "producer cities" to "consumer cities", which raises the prospects of sustainable economic development in China.

Suggested Citation

  • Zheng, Siqi & Kahn, Matthew E. & Liu, Hongyu, 2010. "Towards a system of open cities in China: Home prices, FDI flows and air quality in 35 major cities," Regional Science and Urban Economics, Elsevier, vol. 40(1), pages 1-10, January.
    • Handle: RePEc:eee:regeco:v:40:y:2010:i:1:p:1-10
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    More about this item

    Keywords

    China Urban growth FDI Air pollution Quality of life;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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