In the early and mid - 2000s, the development of land reserve system promoted a structural change in residential land market in urban China, and the municipal government has become the sole supplier of urban residential land after the structural change. This paper examines the impact that direct government control over residential land supply has on real estate markets in major Chinese cities. It is found that there is a significant decrease in land supply after the establishment of direct government control over residential land supply, and the decrease in land supply has put downward pressure on new housing supply. It is also found that there is a decline in the price elasticity of new housing supply in the period characterized by more restrictive land supply
