The impact of Global Economic Policy Uncertainty on the Chinese housing price

Global Economic Policy Uncertainty (GEPU) represents a critical determinant of housing market dynamics in increasingly integrated economies, yet its transmission mechanisms to Chinese provincial housing prices remain theoretically ambiguous and empirically underexplored. The research motivation centers on understanding how GEPU influences housing prices through multiple channels: financial transmission via interest rate adjustments affecting mortgage costs and investment decisions, trade channels through foreign direct investment flows altering property demand, and expectation channels whereby uncertainty dampens economic growth and consumer confidence, subsequently reducing housing market activity. This investigation becomes particularly compelling given China's unique institutional framework combining capital controls with managed exchange rates, creating potential buffers against external shocks while simultaneously experiencing growing integration with global markets. Recent events including Sino-American trade tensions and Federal Reserve policy volatility demonstrate GEPU's capacity to generate cross-border spillovers, making systematic analysis essential for understanding contemporary housing market determinants. Employing Structural Vector Autoregression methodology with provincial panel data, the study reveals that while GEPU exerts limited direct influence on housing prices, substantial indirect effects operate through economic growth suppression and confidence deterioration. The analysis uncovers bidirectional causality wherein domestic housing volatility feeds back into global policy uncertainty, challenging conventional unidirectional spillover assumptions and highlighting China's dual role as both recipient and generator of international policy uncertainty signals.