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Instrumental land use investment-driven growth in China

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  • Mingxing Liu
  • Ran Tao
  • Fei Yuan
  • Guangzhong Cao

Abstract

In the past decade or so, local governments in China have significantly increased their land development activities by acquiring land from farmers and leasing it on a large scale to industrial and commercial developers. This paper is an analysis of how land is used under China's existing institutional background as a competitive incentive for local investment. It is argued that local land development activities have contributed to an investment-driven growth in China that is not sustainable in the long run. On the basis of a panel data covering all provinces from 1998 to 2005, we empirically analyze the impacts of public land leasing on local fiscal revenue and gross domestic product (GDP). Policy implications are drawn with regard to further steps in land reforms.

Suggested Citation

  • Mingxing Liu & Ran Tao & Fei Yuan & Guangzhong Cao, 2008. "Instrumental land use investment-driven growth in China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 13(3), pages 313-331.
    • Handle: RePEc:taf:rjapxx:v:13:y:2008:i:3:p:313-331
    DOI: 10.1080/13547860802131300
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    References listed on IDEAS

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    1. Bai, Chong-En & Li, David Daokui & Qian, Yingyi & Wang, Yijiang, 1999. "Anonymous Banking and Financial Repression: How Does China's Reform Limit Government Predation without Reducing Its Revenue?," CEPR Discussion Papers 2221, C.E.P.R. Discussion Papers.
    2. Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2009. "Can China's Growth be Sustained? A Productivity Perspective," World Development, Elsevier, vol. 37(4), pages 874-888, April.
    3. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
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    Cited by:

    1. Han, Wenjing & Zhang, Xiaoling & Zheng, Xian, 2020. "Land use regulation and urban land value: Evidence from China," Land Use Policy, Elsevier, vol. 92(C).
    2. Cheng, Jian & Zhao, Jiangmeng & Liu, Dandan, 2024. "Incentive adjustments and land leasing behavior shifts: A quasi-natural experiment of off-office audits," China Economic Review, Elsevier, vol. 87(C).
    3. Zehong Wang & Shaojian Wang & Jieyu Wang & Yuqu Wang, 2022. "Development zones and urban economic performance in China: Direct impact and channel effects," Growth and Change, Wiley Blackwell, vol. 53(4), pages 1762-1782, December.
    4. Canfei He & Zhiji Huang & Rui Wang, 2014. "Land use change and economic growth in urban China: A structural equation analysis," Urban Studies, Urban Studies Journal Limited, vol. 51(13), pages 2880-2898, October.
    5. Junhua Chen & Fei Guo & Hao Wang & Zhifeng Wang & Ying Wu, 2018. "Urban Land Revenue and Sustainable Urbanization in China: Issues and Challenges," Sustainability, MDPI, vol. 10(7), pages 1-12, June.
    6. Xianwei Fan & Dan Zheng & Minjun Shi, 2016. "How Does Land Development Promote China’s Urban Economic Growth? The Mediating Effect of Public Infrastructure," Sustainability, MDPI, vol. 8(3), pages 1-12, March.
    7. Liu, Yongzheng & Alm, James, 2016. "“Province-Managing-County” fiscal reform, land expansion, and urban growth in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 82-100.
    8. Chunhui Liu & Weixuan Song & Chen Zhou, 2017. "Unsuccessful Urban Governance of Brownfield Land Redevelopment: A Lesson from the Toxic Soil Event in Changzhou, China," Sustainability, MDPI, vol. 9(5), pages 1-14, May.
    9. Hui Li & Kunqiu Chen & Lei Yan & Yulin Zhu & Liuwen Liao & Yangle Chen, 2021. "Urban Land Use Transitions and the Economic Spatial Spillovers of Central Cities in China’s Urban Agglomerations," Land, MDPI, vol. 10(6), pages 1-27, June.
    10. Fengyun Liu & Shuji Matsuno & Reza Malekian & Jin Yu & Zhixiong Li, 2016. "A Vector Auto Regression Model Applied to Real Estate Development Investment: A Statistic Analysis," Sustainability, MDPI, vol. 8(11), pages 1-19, October.
    11. Fengyun Liu & Chuanzhe Liu & Honghao Ren, 2018. "Urban Housing Price Fluctuations and Regional Systemic Financial Risks: Panel Spatial Economic Models in Jiangsu, China," Sustainability, MDPI, vol. 10(10), pages 1-17, September.
    12. He, Qingsong & Xu, Min & Xu, Zike & Ye, Yanmei & Shu, Xianfan & Xie, Peng & Wu, Jiayu, 2019. "Promotion incentives, infrastructure construction, and industrial landscapes in China," Land Use Policy, Elsevier, vol. 87(C).
    13. Yilin Chen & Dohèto Othniel Kpoviessi & Harry Aginta, 2023. "Investigating regional income convergence in China: an exploratory spatio-temporal perspective," Letters in Spatial and Resource Sciences, Springer, vol. 16(1), pages 1-18, December.
    14. Wu, Yan & Heerink, Nico, 2016. "Foreign direct investment, fiscal decentralization and land conflicts in China," China Economic Review, Elsevier, vol. 38(C), pages 92-107.
    15. Singhapathirana, Priyanwada Indeewaree & Hui, Eddie Chi Man & Jayantha, Wadu Mesthrige, 2022. "Critical factors affecting the public land development: A systematic review and thematic synthesis," Land Use Policy, Elsevier, vol. 117(C).
    16. Xiaodong Yang & Weilong Wang & Xufeng Su & Siyu Ren & Qiying Ran & Jianlong Wang & Jianhong Cao, 2023. "Analysis of the influence of land finance on haze pollution: An empirical study based on 269 prefecture‐level cities in China," Growth and Change, Wiley Blackwell, vol. 54(1), pages 101-134, March.
    17. Jie Lin & Xin Li & Jianfu Shen, 2024. "Industrial Land Protection and Allocation Efficiency: Evidence from Guangdong, China," Land, MDPI, vol. 13(12), pages 1-20, December.

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