As the property market continues its downward adjustment, discussions on identifying a new pillar industry and cultivating fresh economic growth points have become a hot topic among market participants. In a recent interview on the Financial New Drivers program, Yao Yang, Dean of the Shanghai University of Finance and Economics' Lingang Advanced Finance Institute and a visiting professor at Peking University, shared his perspective. He noted that the debate over which sector could succeed real estate must first clarify whether we are talking about supply-side substitution or a comprehensive replacement. If we look solely at industry scale and its ripple effect on upstream and downstream sectors, the automobile industry stands the best chance of approaching real estate's role on the supply side. However, when viewing the broader economic system, no single industry can fully take over what real estate does.
In Yao's view, judging whether an industry can replace real estate shouldn't be based on a simple comparison of output values. Instead, one must examine forward and backward industrial linkages along with the capacity to drive related sectors. The real estate chain spans land development, building construction, building materials, home furnishing, home appliances, financial services, and property management, making it exceptionally wide-reaching. "If there is one industry that could substitute for real estate on the supply side going forward, it can only be the auto industry," Yao said.
He pointed out that automobiles also feature an extended industrial chain, stretching from steel, non-ferrous metals, components, and power batteries to finished vehicle manufacturing, sales, insurance, and after-sales services. This enables the sector to stimulate multiple related industries. "Other industries are unlikely to replace real estate. You can't just look at whether their output value surpasses that of property. You also have to evaluate forward and backward links. When you factor all of that in, only the auto industry's chain comes close—if not matching real estate, then at least within striking distance," he explained.
Data shows that from January to July 2026, China's new energy vehicle production and sales each exceeded 9 million units, with new energy vehicles accounting for 51.2% of total new car sales. When asked about the highly anticipated artificial intelligence sector and its related supply chain, Yao argued that AI's pattern of industrial connectivity differs fundamentally from real estate's. While AI demands talent, computing power, and storage capacity, its direct industrial chain is relatively short compared to real estate or automobiles. As a result, it struggles to generate the same breadth of upstream and downstream stimulation.
Nevertheless, Yao stressed that even the auto industry can only partially shoulder real estate's original function on the supply side, and it cannot fully replicate the sector's role. In his assessment, real estate's distinctiveness within the macroeconomy lies in its ability to connect both supply and demand simultaneously. Property development not only pulls along construction, building materials, and furnishing industries but also directly creates investment and housing demand. Other sectors might expand production and boost their supply chains, yet they may not be able to reproduce real estate's effect on the demand side.
"Many people fail to grasp this. Real estate serves both the supply and demand ends, directly generating demand. If you only expand supply without the corresponding demand, how can you replace real estate? At best, you substitute its supply side, but you can't substitute the demand side," Yao said. He added that real estate occupies a substantial weight in the overall economic system, and its role is uniquely multifaceted. "It's impossible for any single industry to comprehensively replace real estate. The auto industry can only take over the supply aspect; it simply cannot replace the demand side," he concluded.