Urbanization, Land Development, and Land Financing: Evidence from Chinese Cities

ABSTRACT:

China’s urbanization is significant worldwide. This process is characterized by underurbanization of population and fast urban land expansion. The driving forces behind this expansion and their rationale are not fully understood and empirically tested. This study fills this gap by analyzing panel data from 1999–2009 for all 286 prefecture-level cities in China. The findings reveal that land financing, using different measures, significantly contributed to land urbanization in China. Economically stronger cities with higher real estate investment more aggressively pushed for land urbanization. The true purpose of urbanization should be improving the living standard, not to generate revenue. It is suggested that urbanization can serve its justified goals only if fiscal and political relations between central and local governments can be adjusted. As more data become available, future studies are encouraged to further explore the subject by investigating additional factors and the latest trend of urbanization in China.

Struggling land under the pressure of urbanization, Guangzhou, China (2011).

Notes

A prefectural city is an administrative division of Chinese governments, ranking below a province and above a county (or county-level city) in China’s administrative structure.

The Ministry of Land and Resources compiled the data on the land leasing fee. The ministry has built up a nationwide data collection system with regard to the revenue. According to the official guideline, the land leasing fee is being saved under the local coffer. Though we don’t rule out the possibility of underestimating the land lease fee, in general the data are reliable after various cross-checks.

Additional information

Notes on contributors

Lin Ye

Lin Ye is an Associate Professor in Center of Chinese Public Administration Research, Institute for Urban Governance and Urban Development, School of Government at Sun Yat-sen University in Guangzhou, China. He holds an MPA and PhD in urban and public affairs from the University of Louisville. His research interests are in urban policy and politics, metropolitan and regional governance, and urbanization in China. His academic work has appeared in both urban studies and public administration journals, such as Journal of Urban Affairs, Journal of Urban Planning and Development, Journal of Planning Literature, Social Policy and Administration, Public Administration Review, American Review of Public Administration, and other journals in China.

Alfred M. Wu

Alfred M. Wu is a Lecturer in the Department of Asian and Policy Studies at the Hong Kong Institute of Education. He earned his PhD from City University of Hong Kong. His research interests include central–local fiscal relations, public sector reform, corruption and governance, and social protection in Greater China. He is the author of the forthcoming book Governing Civil Service Pay in China. He is also the author or co-author of articles in such journals as World Development, Public Choice, Publius: The Journal of Federalism, Review of Public Personnel Administration, Social Policy and Society, and Journal of Contemporary China.