Why China has awakened: an institutional analysis of the office market in Beijing and Shanghai

The reform and open‐door policy has brought continuous rapid economic growth and transformed China from a closed command economy to an open economy dominated by markets. This paper analyses the office markets in Beijing and Shanghai in an institutional context. It scrutinises the factors that led to the boom and bust of the office markets in these two largest cities in China in the 1990s. It provides an analysis of the changes to the ruling party and the government that lead to increased competition and reduced government intervention, transforming state firms into real market players. With surging domestic/foreign demand and more rational supply, growth of rental and capital values has returned. The paper concludes that the office markets in Beijing and Shanghai are becoming huge competitive playgrounds for genuine property developers and investors and show great potential as the two cities upgrade themselves into international as well as domestic business centres. Copyright © 2002 Henry Stewart Publications