In China, when urban housing prices soar, manufacturing firms would not relocate largely. This is because: (a) the geographical scale of Chinese cities is generally large, with vast land areas to accommodate different industries; (b) urban governments need manufacturing to contribute GDP and jobs. Therefore, they will utilize favorable land policies to retain existing manufacturing firms and attract more new ones; (c) the agglomeration economies generated by infrastructure investment, large labor pools, and knowledge spillovers outweighs the agglomeration diseconomies caused by rising housing prices, which makes firms more willing to stay rather than relocate. The empirical research in this chapter shows that firms are more likely to relocate within different districts of a city rather than between different cities. This chapter aims to illustrate that urban governments strive to balance the relationship between the manufacturing sector and the real estate sector in order to maintain a high proportion of manufacturing in the city's industrial structure, which is of great significance for economic stability.