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Local "Land Finance" in China's Urban Expansion: Challenges and Solutions


  • Guangzhong Cao
  • Changchun Feng
  • Ran Tao


This paper considers the issue of local "land finance" in the context of China's fast urban expansion. In an analysis of China s land requisition and public leasing system we argue that low-cost land acquisition is the fundamental cause of land-related distortions that have occurred during China s urbanization. Granting farmers the power to negotiate directly with land users during urban expansion, combined with coordinated land tax reforms to consolidate local tax bases is the key to China achieving both equity and land use efficiency in urban expansion. Copyright (c) 2008 The Authors.

Suggested Citation

  • Guangzhong Cao & Changchun Feng & Ran Tao, 2008. "Local "Land Finance" in China's Urban Expansion: Challenges and Solutions," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(2), pages 19-30.
  • Handle: RePEc:bla:chinae:v:16:y:2008:i:2:p:19-30

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    References listed on IDEAS

    1. Bowlus, Audra J. & Sicular, Terry, 2003. "Moving toward markets? Labor allocation in rural China," Journal of Development Economics, Elsevier, vol. 71(2), pages 561-583, August.
    2. Albert Park & Hehui Jin & Scott Rozelle & Jikun Huang, 2002. "Market Emergence and Transition: Arbitrage, Transaction Costs, and Autarky in China's Grain Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 67-82.
    3. Hans Löfgren & Sherman Robinson, 1999. "Nonseparable Farm Household Decisions in a Computable General Equilibrium Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 663-670.
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    1. repec:eee:foreco:v:29:y:2017:i:pa:p:14-24 is not listed on IDEAS
    2. Ghatak, Maitreesh & Mookherjee, Dilip, 2014. "Land acquisition for industrialization and compensation of displaced farmers," Journal of Development Economics, Elsevier, vol. 110(C), pages 303-312.
    3. Wen Wang & Fangzhi Ye, 2016. "The Political Economy of Land Finance in China," Public Budgeting & Finance, Wiley Blackwell, vol. 36(2), pages 91-110, June.
    4. 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.
    5. Chowdhury, Prabal Roy, 2013. "Land acquisition: Political intervention, fragmentation and voice," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 63-78.
    6. Tan, Rong & Qu, Futian & Heerink, Nico & Mettepenningen, Evy, 2011. "Rural to urban land conversion in China — How large is the over-conversion and what are its welfare implications?," China Economic Review, Elsevier, vol. 22(4), pages 474-484.
    7. Dong, Yilin, 2016. "A note on geographical constraints and housing markets in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 15-21.
    8. Bhattacharya, Sourav & Kundu, Tapas, 2014. "Resistance, redistribution and investor-friendliness," Journal of Development Economics, Elsevier, vol. 109(C), pages 124-142.
    9. repec:bla:ijurrs:v:40:y:2016:i:6:p:1112-1133 is not listed on IDEAS
    10. Chen, Daniel L. & Yeh, Susan, 2016. "Government Expropriation Increases Economic Growth and Racial Inequality: Evidence from Eminent Domain," TSE Working Papers 16-693, Toulouse School of Economics (TSE).

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