Urbanization path, housing price and land finance: International experience and China’s facts

Urban development rules are examined in this paper from macroscopic and microscopic perspective. At the macro level, 99 global economies from 1991 to 2018 were selected and divided into two sub-samples of developed and developing economies to study the historical rule of urbanization. As urbanization level progresses, there is an inverted U-shaped relationship between the population proportion of large cities and degree of urbanization; population mobility experiences a process of first concentration and then dispersion. Based on the full sample, when the average urbanization rate reaches about 75.94%, the population-carrying capacity of large cities approaches the saturation value. In sub-samples, the turning point of the urbanization rate is about 56% for developing economies and 87% for developed economies. At the micro level, an agent-based model was adopted to simulate urbanization. Using China’s data to set the parameters, the results show that the evolution of urbanization follows a general rule of prioritizing the development of large cities. The local government’s dependence on “land finance” and consequently high housing prices will restrict urbanization development, which hinders population growth in large cities. These findings may prove helpful to government in urbanization related policy-making, especially land system and related policies.