This chart shows monthly growth of real estate investment in China along with the
volume of new floor space started and sold. We have written previously about the impact of real estate construction on overall GDP growth, which we estimate accounts for at least 15 percent of GDP. The correlation between real estate activity and overall GDP growth can be seen in the close relationship between movements in the two indicators. Tamping down real estate prices will be a challenge because real estate is both the heart of real economic activity in China and the lynchpin of its financial system.