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(Download PDF) Land Finance Dependence and Urban Land Marketization in China - The Perspective of Strategic Choice of Local Governments On Land Transfer Xin Fan Sainan Qiu Yukun Sun Full Chapter PDF
(Download PDF) Land Finance Dependence and Urban Land Marketization in China - The Perspective of Strategic Choice of Local Governments On Land Transfer Xin Fan Sainan Qiu Yukun Sun Full Chapter PDF
(Download PDF) Land Finance Dependence and Urban Land Marketization in China - The Perspective of Strategic Choice of Local Governments On Land Transfer Xin Fan Sainan Qiu Yukun Sun Full Chapter PDF
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Land Use Policy 99 (2020) 105023
Keywords: In the context of tax-sharing system, the issue of using profits from land transfers to cover local government
Urban land marketization deficits has attracted widespread attention. However, research on how local governments contingently choose
Land finance dependence different types of urban land transfer methods and the transfer volumes remains limited. This paper utilizes
Industrial land China’s transfer of land parcels data from 2007 to 2016 to calculate the marketization level of different types of
Commercial land
urban land, and investigates the driving forces of urban land marketization in China, paying special attention to
Residential land
land finance dependence and urban land marketization. We find that urban land marketization level is in-
creasing. Among different urban land types, residential land has the highest marketization level, while industrial
land has seen the largest increase in marketization. The results of a spatial lag model also show that when local
governments increase the level of land marketization, governments in neighboring regions react correspond-
ingly. Judging from the status quo of economic development in most cities, local governments usually tackle
financial deficits by vigorously promoting urban land marketization, but they tend to prioritize residential and
commercial land transfers for their own interests given the degree of land finance dependence. This study
broadens our understanding of the heterogeneous nature of land marketization and the role of local government
behavior in the urban land market in China.
1. Introduction the local government rose from 1.47 trillion yuan in 2007 to 7.31
trillion yuan in 2016, an increase of nearly 400 % (Fig. 1). Changes in
Under China's current fiscal and tax systems, the local government deficits increase the demand for government revenue at the local level
deficit and the political promotion system are primary driving forces for (Pan et al., 2015). Among all feasible approaches, land transfer fees
land finance. On the one hand, the reform of China’s tax-sharing system have become the primary source of extra-budgetary income to cover the
has decentralized the responsibility of financing local government fiscal deficit resulting from decreases in funding from the central gov-
programs. For example, firms that originally paid taxes to local gov- ernment (Lichtenberg and Ding, 2009; Lin, 2007; Lin and Yi, 2011; Fu,
ernments are now taxed by the central government, indicating a plunge 2015), with amount increasing from 1.22 trillion yuan to 3.65 trillion
in local government revenue: in the first year under the reform, the yuan during the period from 2007 to 2016; although their proportion
ratio of local government fiscal revenue to the national fiscal revenue has fluctuated greatly, land transfer fees have provided up to 36 % of
dropped from 78 % to 44.3 %. As the reform of the tax-sharing system local government revenue.1
continues, the aim of economic growth causes increasing pressure on One the other hand, as local economic growth and government
local governments (Tao et al., 2010; Zhang, 2006). The fiscal deficit of revenue are the two basic criteria on whether the local government
Corresponding author at: 182 Nanhu Avenue, East Lake High-tech Development Zone, Wuhan, 430073, China.
⁎
https://doi.org/10.1016/j.landusepol.2020.105023
Received 31 December 2019; Received in revised form 23 June 2020; Accepted 14 August 2020
Available online 02 September 2020
0264-8377/ © 2020 Elsevier Ltd. All rights reserved.
X. Fan, et al. Land Use Policy 99 (2020) 105023
Fig. 1. Land transfer fees, local government fiscal deficit and the ratio of land transfer fees to local government revenue.
official can receive promotion, land finance has been a popular tool of People's Republic of China explicitly promoted land market reform in
governments because in the short term it creates an impressive ac- 2002,3 China's urban land marketization level has shown a steady up-
complishment for both the jurisdiction and its officials (Oi, 1995; Chen, ward trend (Liu et al., 2016).
2004; Maskin et al., 2000; Chen et al., 2005). In addition, empirical Looking back on the development of China's land marketization, it
studies have shown that for every one percentage pointincrease in has been a gradual process pushed forward by the central government
China's regional economic growth rate, the probability of promotion for from top to bottom. However, the degree of implementation of land
provincial officials increases by 15 percentage points (Li and Zhou, marketization requirements vary significantly among local govern-
2005). ments, providing a rich basis for the differential analysis, which is the
The continued acceleration of industrialization and urbanization focus of this paper. As China’s economy has developed, local govern-
has increased the demand for urban land (Liu, 2018). Under the public ments now face greater financial pressure. They must decide on how to
land ownership system in China, the primary land transfer market is effectively relieve this pressure using both government intervention and
monopolized by local governments, which can selectively implement the market power in various types of land market (Yang et al., 2015;
land management policies authorized by the central government Wang and Hui, 2017); however, the relationship between the land
(O’Brien and Li, 1999; Ran, 2013; Liu et al., 2014) as well as make self- transfer behavior dominated by local governments and urban land
interest oriented land transfer decisions that affect land marketization. marketization is dynamic. As an important source of financial revenue
As China continues marketization reform, the role of market mechan- for local governments, local governments’ dependence on land transfer
isms in the allocation of land resources is becoming more important. revenue not only has a positive impact on land prices (Zhang et al.,
Because local governments cannot create more land, its effective use 2016), especially on the prices of commercial and residential land (Pan
will benefit China's economic growth and urban development (Mo, et al., 2015), but also increases the amount of land transfers (Shu et al.,
2018; Halleux et al., 2012). 2018). Such growth in land transfers has a clear driving effect on the
Different from market-oriented land allocation systems in developed development of the land market, subsequently accelerating the reform
countries (Alonso, 1964), China's urban land allocation system is both of land marketization. However, our data also demonstrate that in
market-oriented and government-monitored (Haila, 2007; Xu and Yeh, economically underdeveloped regions, the fiscal deficit has inhibited
2009). During the planned economy period, the government made the the level of urban land marketization (Liu et al., 2016), in other words,
urban land in China available at no cost. After the economic reform and the dependence on land finance caused by local government fiscal
the opening up of the country, China's urban land available for devel- pressure has inhibited the level of urban land marketization. With the
opment gradually changed from free allocation to paid transfer. In the above discussion in mind, so far scholars have not reached a consensus
1990s, the initial land transfer method in China was primarily based on on the relationship between land finance and urban land marketization.
closed-door negotiations between government officials and land users If we consider the differences in the land strategies of the local gov-
(xieyi),2 a system that incentivized rented use and other problems as- ernments, their relationship will become more unclear.
sociated with economic inefficiency (Cai et al., 2013) as well as led to
inefficient uses and waste of land resources. Compared with commer-
cial and residential land, the transfer of industrial land is more complex 3
In 2002, the Ministry of Land and Resources of the P.R.C issued the
and chaotic. Because of China's regional economic competition, local Regulations on the Transfer of State-owned Land Use Rights by Public Trending,
governments have successively transferred industrial land by attracting Auctioning and Listing of Quotation, stating that “All kinds of commercial,
investors with low, zero or even negative (considering subsidies for tourism, entertainment, and commercial housing must be sold by public
infrastructure support) land prices. To achieve efficient use of land trending (zhaobiao), auctioning (paimai), and listing of quotation (guapai)
resources and to be in line with the reform of the economic system, the (MLRC, 2002 Ministry of Land and Resources of China, 2002).” In August 2006,
central government began to vigorously promote land market reforms. the Notice of the State Council on Strengthening Relevant Issues Concerning
From the beginning of the 21 st century, China's land marketization Land Regulation and Control clearly stated: “Industrial land must be sold by
process has accelerated; since the Ministry of Land and Resources of the means of public trending, auctioning and listing of quotation, and the selling
price must not be lower than the published minimum price standard.” In March
2007, the Property Right further stipulated that: “Management land for in-
dustrial, commercial, tourism, entertainment and commercial housing, and
2
There is only one assignee in the closed-door negotiation, and the land those with more than two intentional land use in the same land shall be auc-
transfer price is determined by the government and the transferee in private. It tioned utilizing public bidding, public tendering and auctioning (Ministry of
is not a formal market-based transfer method. Land and Resources of China, 2007).”
2
X. Fan, et al. Land Use Policy 99 (2020) 105023
Using a multi-scale, multi-mechanism framework to analyze the even fiscal surpluses, the motivation to make up for the fiscal deficits is
strategic choices of local governments in the face of central policy, this weaker, but these cities are concentrated in economically developed
research aims to improve our understanding of China's industrial, areas such as the southeast coast. Due to the pressure of officials’ pro-
commercial, and residential land market reforms. We use detailed motion competition and the performance evaluation by superior gov-
Chinese land transfer information from 2007 to 2016 and apply a ernments, local governments are often in a state of rivalry and inter-
spatial lag model to examine the relationship between land finance action with each other, especially in regions that are geographically
dependence and urban land marketization, paying special attention to adjacent or have similar economic development levels. These local
the heterogeneity of these effects among different types of land. governments not only have to ensure the economic growth rate, but
This paper contributes to the existing literature in two aspects. First, also have to seek higher rankings over their “peers”. Consequently, they
it appears to be the first paper to use a unique and comprehensive have a strong incentive to pursue land finance (Oi, 1995; Chen, 2004;
database of urban land transactions to measure the general urban land Maskin et al., 2000; Chen et al., 2005).
marketization and the marketization level of different types of land. China has formed a three-level structure for its land market, namely
Existing research primarily uses macro-data from the China Land and the agricultural land acquisition market, the primary land market, and
Resources Statistical Yearbook in calculating land marketization (Liu the secondary land market. The primary land market is monopolized by
and Lin, 2014; Liu et al., 2016; Wu et al., 2015). However, since 2008 local governments, which can selectively implement the land manage-
the government has not released the sub-item data of “public tendering, ment policies established by the central government (O’Brien and Li,
auctioning and listing of quotation,” so land marketization cannot be 1999; Ran, 2013) or develop land transfer decisions for their own in-
accurately measured. Second, considering the spatial spillover effects of terests. Both approaches directly affect urban land marketization. To
land marketization (Brueckner, 2003) and the contingency choices of address financial pressure and achieve long-term economic growth in
local governments for different types of land transfer, we use a spatial the region, local governments have gradually implemented a develop-
econometrics model to investigate the relationship between land fi- ment routine that relies on the sale of land to obtain extra-budgetary
nance dependence and marketization of different types of land to pro- income. Land finance has become typical of local governments under a
vide empirical evidence on the hypothesis that policy choices of local decentralization policy.
governments vary for different types of land transfer (Kong et al., China has experienced rapid urbanization at an unprecedented rate
2018). since the 1978 reform and the opening of the economy (Bai et al.,
The rest of the paper is organized as follows: In Section 2, we 2014). With the continued acceleration of industrialization and urba-
measure the level of urban land marketization and the degree of land nization, the demand for urban land in China has increased rapidly. But
finance dependence while conducting a corresponding trend analysis the land resources of local governments are limited. To maximize their
based on the analysis of the internal mechanism of land finance de- interests, local governments implement land transfer strategies based
pendence and urban land marketization. We introduce relevant vari- on various degrees of land finance dependence.
ables and data sources and construct a spatial econometrics model in Local governments adopt different methods of land transfer and
Section 3. Section 4 considers the impact of land finance dependence of require different land transfer income. At the beginning of the market-
local governments on the overall and different types of urban land oriented reform of urban land transfers, the only market-based method
marketization and Section 5 concludes with a discussion on implica- for land transfers stipulated in government documents was “public
tions of this study and suggestions for future research. tendering and auctioning.”5 In 2002, the Ministry of Land and Re-
sources introduced the “listing of quotation” transfer method.6 Al-
2. The evolution of land finance dependence and urban land though the central government clearly stipulated that industrial, com-
marketization mercial and residential land must be sold through market-based
methods such as “public tendering, auctioning, or listing of quotation”,
2.1. Urban land marketization from the perspective of the strategic choice of it is easy for local governments to intervene in the “listing of quotation”
the local government in China to obtain profits in corruption (Xu et al., 2009). Therefore, the gov-
ernment is more inclined to transfer land through “listing of quotation”.
In 1994, China actively began to implement the tax-sharing system,
dividing the tax system into the central tax, local tax, and central-local
shared tax and classifying all consumption taxes and 75 % of value- 4
Transfer payments are divided into general transfer payments and special
added tax (VAT) as central fiscal revenue; the reform of the income tax transfer payments. Local governments need to use special transfer payments for
sharing system introduced in 2002 changed the corporate income tax the purposes specified by the central government. Special transfer payments
and the personal income tax from local tax to central-local shared tax, still account for a large proportion. On the one hand, the special transfer pay-
ment does not form the disposable financial resources of the local government;
thus reducing the income tax received by local governments by 40 %
on the other hand, too many local special fund packages required in special
since 2003. The change from a business tax to a VAT fully implemented
transfer payments (such as the transfer payment for agriculture, education,
in 2016, further reduced the local government's financial resources by science and technology, etc. requires the corresponding infrastructure of the
reducing both the VAT and the double taxation. The implementation of local government) increase the burden of local finances, forcing many places to
the tax-sharing system increased the share of central government rev- crowd out normal fiscal expenditures and also affected the overall balance of
enue, shifted the public expenditure responsibility to the local gov- local fiscal budgets.
ernments at the same time (Wu et al., 2015). Local government revenue 5
Auctioning refers to that the assignor first sets the floor price, bidders take
rose from 2.38 trillion yuan to 8.72 trillion yuan, and fiscal expenditure turns to quote prices, and the bidder with the highest price obtains the land use
rose from 3.83 trillion yuan to 16.04 trillion yuan from 2007 to 2016, right. Public tendering refers to bidding for the right to use a piece of land in a
the increase in fiscal expenditure was significantly greater than the written bidding within a prescribed period. Unlike the public price system of
increase in fiscal revenue. Among the 283 prefecture-level cities stu- auctions, bidders involved in public tendering do not know one another’s bids,
and the land use right lender chooses the highest price to transfer land.
died, only Suzhou, Hangzhou and Wuxi have sustained fiscal surpluses. 6
The listing of quotation is equivalent to a two-stage auction. The bidders in
Land transfer fees is controlled by local government instead of the
the first stage publicly offer prices in a sequence. If there are two or more
central government (Guo and Shi, 2018). Therefore, local governments bidders after the first stage, they are transferred to the live auction, which is the
with large fiscal deficits request both transfer payments from the cen- same as the auction. Unlike auctions, where there are more than three bidders,
tral government and land fees to cover deficits, with the latter being the there is no requirement for the number of bidders to be listed, as long as the
most common way for local governments in China to increase their bidder's bid is not lower than the listed base price, the transaction can be
fiscal revenue (Ding, 2003).4 For regions with small fiscal deficits or completed.
3
X. Fan, et al. Land Use Policy 99 (2020) 105023
As local governments still have considerable monopoly power and a Due to the differences in natural environment, population density
strong willingness to intervene in the market in the transfer of industrial and economic development level, there are large geographic differences
land, the use of various strategies to transfer this type of land at low in land use policies (Wang et al., 2018b). This also leads to a large
prices through “listing of quotation” to attract corporate investment spatial difference in China’s land finance dependence. Observing the
still exists today (Tao et al., 2010). As a result, the transfer price of degree of land finance dependence of various cities in 2016, it can be
industrial land is significantly lower than the price of commercial and found that cities in eastern developed regions such as Nanjing,
residential land, and lower than the market price. Changzhou, Jinan, and Jiaxing have a higher degree of land finance
Local governments make strategic choices on the land transfer types dependence, respectively 0.6063, 0.5944, 0.5265, and 0.5163, much
and on the land transfer income. Selling commercial and residential higher than the average value in 2016 (0.2695). The land finance de-
land through “public tendering, auctioning, or listing of quotation” may pendence of Longnan in the western region is the lowest, only 0.0086.
quickly alleviate financial pressure by obtaining land transfer fees. The developed regions in the east have less financial pressure and
Since industrial zoning is correlated with long-term employment, po- weaker land resource endowment, but the land finance dependence is
pulation growth, and increased business tax revenue streams, there is the highest; the underdeveloped regions such as the western and central
an incentive for local officials to offer industrial land at a low price regions have greater financial pressures and stronger land resource
(Wang, 2014; Wassmer, 2002; Langer and Korzhenevych, 2018). As a endowment, but their land finance dependence is relatively weak. The
general rule, local governments are incentivized to engage in a mixed eastern regions are densely populated with limited land area, resulting
strategy, offering different types of land at different prices. in scarce land resources, but because of their better economic and
The data show that to ease financial pressure, local governments technological conditions, the degree of land use and land prices are
tend to use more land for commercial and residential purposes, selling relatively high (Wang et al., 2018a).
it through the highly market-oriented “public tendering, auctioning, or Although the average fiscal deficits between 2007 and 2016 in the
listing of quotation” option (Li, 2014). Han and Kung (2015) examined eastern region was 8.75 billion yuan, which was much smaller than
the relationship between fiscal revenue, the land transfer area and the 10.63 billion yuan in the central region and 10.54 billion yuan in the
sales income from commercial and residential land, finding in their western region, land sales revenue in the east was 13.84 billion yuan,
sample that every 1 % decrease in fiscal revenue retained by local higher than that in the central region (6.55 billion yuan) and the
governments was the result of an increase of 6.4 %–11.0 % in the western region (5.21 billion yuan). For the central and western regions,
transfer area of commercial and residential land. Such increment in the market mechanism has a weak role in regional development, the
transfer area causes land transfer revenue to increase by 10.0 %–16.3 abundant land resources are not effectively used and the land transfer
%. In other words, in regions where land finance dependence is higher, revenue is relatively small. Despite the heavy financial pressure, the
local governments tend to sell commercial and residential land in a central government's transfer payments are mainly inclined towards the
highly marketable way to compensate for fiscal deficits quickly; how- central and western regions, so land finance dependence is relatively
ever, it is difficult to project the long-term economic development. The low.
opposite is true for areas with lower land finance dependence. Due to In China, the rural land market and the urban land market are di-
differences in the economic development stages and the advantageous vided, with the market-oriented transactions such as “public tendering,
features of the land resources in cities, the strategic choices of local auctioning or listing of quotation” primarily targeting urban land, while
governments with the same land finance dependence are also different, the secondary market of land is close to a completely competitive
indicating heterogeneous impacts of land finance dependence on urban market. Therefore, we use the level of land marketization in the pri-
land marketization. mary market as the measurement of urban land marketization. The
most common methods for land marketization are the direct calculation
2.2. Measurement of land financial dependence and urban land method (Wang and Tan, 2020; Yuan et al., 2019) and the weighting
marketization method (Liu and Lin, 2014; Liu et al., 2016; Wu et al., 2015). The direct
calculation method directly measures the level of land marketization
Faced with the pressure of fiscal deficits, local governments urgently using indicators such as the price, area, and number of land transfers;
need to increase revenues to compensate for them. As an effective way the weighting method, although based on the direct calculation
of rapidly increasing revenues, land transfers are prevalent across method, gives different price weights to those obtained through closed-
China. From the perspective of the income sources of local govern- door negotiation, public tendering, auctioning, and listing of quotation.
ments, land transfer income primarily includes land transfer fees and Compared with the direct calculation method, the weighting method
land-related taxes. However, the complexity of local tax systems and not only considers the land transfer method but also takes into account
the delayed stream of land taxation complicate the measurement of the the deviation between the actual supply price of the land and the
true tax revenue benefit of land transfers. Land transfer fees are one of marketization standard and thus the weighting method can be con-
the most effective ways to address local government deficits as they are sidered as a more comprehensive measurement the level of land mar-
the largest and most easily controlled component of fiscal revenue (Shu ketization.
et al., 2018). By contrast, land-related tax revenue streams, while im- We use the weighting method in this study to measure the mar-
portant, are less easily attributed to a particular land transfer. In this ketization level of the overall and the different types of land using
study we use the land transfer fee to measure land finance dependence various administrative land transection data in China. Specifically, this
(Mo, 2018; Lu et al., 2019), which is calculated as paper uses the detailed information on more than 1.673 million land
ltf transfers in China between 2007 and 2016,7 including land supply,
lfd = project location, area, land use, land supply method, transaction price,
ltf + gbr (1)
where lfd represents land finance dependence, ltf represents the land
transfer fee, and gbr represents the local government’s intra-budgetary 7
China Land Website: www.landchina.com. In 2006, the “Regulations on the
revenue. As calculated, land finance dependence fluctuates, but the
Transfer of State-owned Land Use Rights for Public Tendering, Auctioning and
overall trend declined during the 2007–2016 sample period (Fig. 2). On Listing of Quotation” clearly require that the municipal and county-level gov-
average, the financial dependence of the local government on land in ernment land authorities must publish the results of the transfer of the various
2016 was 0.2695, around 0.0692 less than the average annual land land on the “Results Publicity” column of the China Land Website. The in-
finance dependence. The trend of land finance dependence is coincident troduction of this specification provided a basis for us to use micro-data to
with such factors as tax-sharing reform and economic fluctuations. measure urban land marketization.
4
X. Fan, et al. Land Use Policy 99 (2020) 105023
Fig. 2. The trend of urban land marketization and land finance dependence in Chinese cities.
and the date of signing the contract, among others. We compiled the degree grew dramatically in 2008, increasing by approximately 13
data for the cities based on the 2007 jurisdiction codes.8 Considering percentage points from 0.4471 in 2007 to 0.5733 in 2008. After 2008,
that different land transfer methods have different levels of market- the marketization level of industrial land showed a steady upward
ization, according to the analysis of China's land market transactions trend, increasing to 0.6248 in 2016. From the perspective of time, the
between 2007 and 2016, the average price of land transferred by auc- trend and amplitude of the overall and the different types of land
tion is the highest, so it is used as the market-based benchmark price, marketization levels are closely related to the market-oriented reform
and the price weight is set to 1. process of different types of land.
The price weights of other transfer methods are determined by the To explore the spatial pattern of urban land marketization, we also
relative value of the average price of the land transferred through analyze the overall and different types of land marketization in cities of
public tendering, listing of quotation and closed-door negotiation different locations (see Figs. 3–6). For the timeframe investigated here,
compare with the average price of the land transferred through auction. the regions with a higher level of land marketization are primarily
According to this calculation, the public tendering, listing of quotation, concentrated in key cities in the southeastern coastal areas and the
and closed-door negotiation price weights are 0.94, 0.62, and 0.3, re- capitals of provinces, a trend consistent with the economic develop-
spectively. Finally, the price weight data and the transfer area of each ment and population distribution of the country. The marketization
transfer method are calculated using Formula (2) to obtain the mar- level of commercial and residential land exhibits similar urban dis-
ketization level of the overall and the different types of land. Taking tribution. However, inland cities gradually become regions with a high
into account the trends in the land market and the marketization of sub- level of marketization of industrial land, perhaps because of higher
type land, the land marketization level of industrial land, commercial labor costs and fewer land resources in the coastal areas.
land, and residential land, is calculated as follows: From 2007 to 2016, the construction land area per capita for 33
prefecture-level cities showed negative growth, and most of these cities
Qi Wi were concentrated in coastal areas. The coastal region sales the com-
lmitn =
Qi (2) mercial and residential land at high prices, and the urban land mar-
ketization level has reached a high level. Since the construction land in
where lmitn is the marketization level in city i, year t and type n; Qi is the
coastal areas shifted from the incremental phase to the stock phase, the
land area of the city i sold in the land market by public tendering,
amount of land that can be sold by local government is relatively lim-
auctioning, listing of quotation and closed-door negotiation; and Wi is
ited, so the marketization of various types of land slowly improved and
city i’s price weight of the land sold by public tendering, auctioning,
the local governments needed to find other local revenue sources. Areas
listing of quotation and closed-door negotiation.
with low land resources tended to be more economically developed
Fig. 2 shows the marketization level of the overall and the different
with fewer central transfer payments. These governments’ intra-bud-
types of land in China from 2007 to 2016. The overall land market-
getary revenues at this time primarily came from indirect taxes though
ization in China showed an upward trend during this period. More
land transfers (e.g. business tax, corporate income tax, etc.) created by
specifically, total land marketization grew dramatically in 2008, in-
the construction and real estate industries due to urban expansion, and
creasing from 0.5324 in 2007 to 0.6035 in 2008, an increase of nearly 7
an increase in direct taxes though land transfer (e.g. stamp tax, land
percentage points. After 2008, the overall land marketization level in-
appreciation tax, farm land occupation tax, house property tax and
creased steadily, reaching to 0.6303 in 2016. Residential land exhibits
urban land use tax, etc.) (Lian et al., 2019). These accounts for 35.18 %
the highest level of marketization, with little fluctuation during the
and 11.01 % of local government revenue during the period of
period from 2007 to 2016 when the marketization level of residential
2007–2016. At this time, the adjustment and optimization of the
land increased by only 1 percentage point. In 2007, the marketization
structure of urban land became particularly important.
level of commercial land was 0.612, reaching 0.6372 in 2016. In-
dustrial land exhibits the lowest level of marketization, although the
3. Methods and data
8
Since the land data of the farmer's corps and the corps are listed separately
The land transfer strategy of local governments can be affected by
in the China Land and Resources Statistical Yearbook, they are not counted in
the prefecture-level cities. Therefore, the data of the farmer's corps and the the actions of local governments in other regions. This competitive
corps are excluded. In the 283 prefecture-level cities based on 2007, Sanya and strategic interaction between local governments will have a spatial
Lhasa were missing data during the sample period, and Chaohu was merged spillover effect in urban land marketization. To address this issue, we
with Hefei in 2011. Therefore, Sanya and Lhasa were excluded, and the data of use the spatial lag model to investigate if the level of land marketization
Chaohu was merged with the Hefei for calculation. is affected by spatial spillover effects. According to the spatial
5
X. Fan, et al. Land Use Policy 99 (2020) 105023
Fig. 3. The change of urban land marketization in China, 2007 and 2016.
Fig. 4. The change of marketization level of industrial land in China, 2007 and 2016.
Fig. 5. The change of marketization level of commercial land in China, 2007 and 2016.
autocorrelation test, the urban land marketization for each year and the period lag as the explanatory variable.9 We use the following model:
Moran’s I of the marketization level of different types of land are all
significant at the 1 % level, indicating that urban land marketization 9
One may concern with the possible reversal causality relationship between
has a positive spatial spillover effect and the spatial econometrics
land finance dependence and urban land marketization. Theoretically, greater
model is more reasonable. The p-value of the LM error is 0.005, and the
land financial dependence will cause higher urban land marketization, with a
p-value of LM lag is 0.001, indicating that both pass the significance view to alleviate the local government's dependence on land finance in the
test; the p-value of the R-LM error is 0.191, meaning that the sig- future by increasing land sales prices. If the empirical results also support this
nificance test is not passed; the p-value of R-LM lag is 0.025, passing the theoretical analysis, the reversal causality issue tends to weaken our estimation
significance test at the 1 % level; therefore, we use the spatial lag model of the coefficients concerned, rather than create a fake relationship. That is to
(SLM). say, our estimates of both the causes and effects of the urban land marketization
Due to the time lag of local government's land finance dependence provides a lower bound on the true relationship (Wang and Hui, 2017). Hence,
on its transfer behavior, we choose land finance dependence with one lagging land financial dependence by one year can also alleviate the potential
endogeneity issue.
6
X. Fan, et al. Land Use Policy 99 (2020) 105023
Fig. 6. The change of marketization level of residential land in China, 2007 and 2016.
lmitn = c +
N
wij lmnjt + lfdi, t + Xit + 4. Empirical analysis
j=1 1 it
(3)
where lmitn represents the marketization level of city i in the year t 4.1. Impact of land finance dependence on urban land marketization
and type n; lfd is land finance dependence; i, j represents prefecture-
level city, i j , N = 280; wij is a spatial weighting matrix processed by Table 2 shows the impact of the land finance dependence of local
row standardization10 is the spatial weight coefficient measuring the governments on urban land marketization under different circum-
degree of influence of the land marketization level in neighboring re- stances. Specifically, Models 1 and 2 show the influence of land finance
gions on the marketization level of local land; is the coefficient of land dependence on urban land marketization without taking the spatial
finance dependence; Xit is the vector of control variables; is the re- spillover effect into consideration, while Models 3 and 4 show the in-
gression coefficients of a vector of control variables; c is the constant fluence of land finance dependence on urban land marketization while
term; and ε is a random disturbance term. To test whether there is a including the spatial spillover effect in the model. To further verify the
nonlinear relationship between land finance dependence and urban robustness of our models, we add the ratio of the land area, indicated by
land marketization level, we introduce a quadratic term of land finance public tendering, auctioning and listing of quotation, to the total land
dependence, in the model: transfer area by substituting the explained variable. Models 5 and 6
show the effect of the local government’s land finance dependence on
N
lmitn = c +
j=1
wij lmnjt + lfdi, t 1 + lfdi2, t 1
+ Xit + it
(4) urban land marketization under the different explained variable. From
the empirical results, the coefficient significance and direction of the
The control variables of this study include the average income (ai), core explanatory variables are basically consistent, and the model has
the land resource endowment (lrd), and the traffic accessibility (ta). strong robustness.11
Average income is measured by the average wage of urban employees. The results indicate a spatial agglomeration effect in the urban land
Existing research reveals that the income level of employees will affect marketization. Based on Models 3 and 4, the coefficient of ρ is sig-
the city’s demand for land and the development of the land market (Wu nificantly positive at the 1% level, indicating a positive spatial ag-
and Heerink, 2016). While the level of land marketization is related to glomeration effect. The coefficient values of ρ are 0.3489 and 0.3472,
the land resource endowment, the increasingly prominent contradiction respectively, indicating that the urban land marketization level in
between people and land shifts the attention of local governments to neighboring regions will have a 34.89 % or 34.72 % increase associated
the effective use of land (Lin and Ho, 2003). In this paper, the per capita with a 100 % increase in the local urban land marketization level.
construction land area is used as the control variable reflecting the Under the dual pressure of economic growth and government deficits,
regional land resource endowment. As many studies have highlighted adjacent municipal governments often select the amount and price of
the role of traffic accessibility in driving land use change (Verburg land transfer to attract investment. This model suggests that urban land
et al., 2004; Borzacchiello et al., 2010), this paper uses the per capita marketization in one region will increase the rate of urban land mar-
road area to represent traffic accessibility. In addition, the collinearity ketization in geographically adjacent regions.
test is used in this study to prevent multi-variable collinearity between Although an inverted U-shape is found in the relationship between
the control variables. The results show that the variance inflation factor the degree of land finance dependence and urban land marketization,
(VIF) of all control variables is less than 1.5, indicating no significant urban land marketization still can be considered to have facilitated
collinearity in the model (Belsley et al., 2005). economic development in most cities. As seen in Models 1 and 3, the
Data for these variables come from the 2007–2016 China City coefficients of land finance dependence are both significantly positive
Statistical Yearbook, the China Land and Resources Statistical at the 1% level, indicating that the increase of land finance dependence
Yearbook, the China Land Market Website and statistical yearbooks or is significantly associated with higher levels of urban land market-
news releases from the various provinces and cities in China. The ization. In Model 4, the coefficient of the linear term of land finance
output value of the per capita wage is adjusted based on 2007 price dependence is significantly positive, and the coefficient of the quadratic
levels to eliminate any potential impact of inflation on the results. The term is significantly negative, indicating that land finance dependence
study sample set includes 2800 sample observations from 280 pre- and the land marketization have an inverted U-shaped relationship,
fecture-level cities in China from 2007 to 2016. The statistical de-
scription of each variable is shown in Table 1.
11
Regarding the heterogeneity of the impact of land finance dependence on
10
This study used the geographically adjacent spatial weighting matrix for urban land marketization, we have also found mixed effects under time and
analysis; if the two regions are geographically adjacent, the value is “1”; space differences and fiscal pressure differences. Due to space limitations, we
otherwise the value is “0”. will not list them one by one. If necessary, it can be obtained from the author.
7
X. Fan, et al. Land Use Policy 99 (2020) 105023
Table 1
Summary statistics.
Variables Definition Obs Mean Std. Dev. Min Max
Table 2
Regression results of the full sample.
Variable Ordinary panel model Spatial lag model Replace the explained variable
Note: The t or z values are in parenthesis. ***, **, and* represent significant levels of 1%, 5%, and 10 % respectively.
with the inflection point at 0.5735. During this period, the land finance traffic accessibility is significantly positive at the 5% level, indicating
dependence in most cities in China did not reach this inflection point, that transportation accessibility will accelerate the concentration of
suggesting that land finance dependence has played a role in promoting factors and increase the level of urban land marketization.
the urban land marketization level during the sample period (Fig. 7).12
The inclusion of the spatial matrix in the model confirms that the 4.2. Analysis of the influence of land finance dependence on the
magnitude of the effect of land finance dependence on urban land marketization level of different types of land
marketization relies on the presence of geographically adjacent land.
Comparing Models 1 and 3, we may discover that the effect of land Faced with the increasing fiscal deficit, local governments often use
finance dependence on urban land marketization is 0.0342 and 0.0296, their own discretion in selecting the types of land to transfer. As shown
respectively, indicating that if spatial spillover effect is not considered, in Table 3, all ρ values are positive and significant at the 1 % level,
our coefficient estimates on the land finance dependence variable will indicating that the marketization level of different types of land in
be positively biased. prefecture-level cities in China exhibits a significant spatial agglom-
In addition, in model 4, among other relevant factors, average in- eration effect, which is consistent across the entire sample. Compared
come is associated with higher levels of urban land marketization, in- with the model without considering the spatial spillover effect, the
dicating that higher average income will not only increase the demand contribution rate of land finance dependence to urban land market-
for residential land but also affect the demand for commercial land and ization decreased when considering the spatial spillover effect, in-
improve the urban land marketization level. Higher land resource en- dicating that the effect of land finance dependence on different types of
dowment is associated with lower levels of urban land marketization. land marketization level may be overestimated without considering the
Areas with poor land resources require more efficient means of allo- spatial spillover effect.
cating land resources and hence governments may actively cultivate As can be seen in Model 2, Model 4 and Model 6 in Table 3, the
and develop the land market, while renting land and wasting land re- coefficients of degree of land finance dependence are all significant and
sources are seen more frequently in areas with abundant land resources. positive, indicating that land fiscal dependence on land transfers in-
Our result is consistent with the above hypothesis. The coefficient of creases the level of marketization of all types of land. The acceleration
effect of land finance dependence on the marketization level of in-
12 dustrial land is, however, less than that of commercial and residential
From the correlation analysis, the land finance dependence of China’s 147
prefecture-level cities still primarily plays a positive role in promoting land land. As a result of fiscal decentralization, local governments prefer to
marketization. Due to space limitations, the coefficients are not listed here. reduce the proportion of industrial land transferred by closed-door
They are, however, available upon request. In the following research, we only negotiations but increase the price of industrial land by increasing the
examine the linear relationship between land finance dependence and urban amount of industrial land transferred by “public tendering, auctioning
land marketization. and listing of quotation”. According to the data, of the industrial land
8
X. Fan, et al. Land Use Policy 99 (2020) 105023
Fig. 7. The relationship between land financial dependence and urban land marketization in 280 prefecture-level cities.
Table 3
Regression results for the molecular terms.
Variable lmi lme lmr
Note: The t or z values are in parenthesis. ***, **, and* represent significant levels of 1%, 5%, and 10 % respectively.
transferred from 2007 to 2016, the proportion transferred by closed- million yuan per hectare, 35.0659 million yuan per hectare and
door negotiations decreased from 67.62 % to 3.43 %, improving the 17.2209 million yuan per hectare, respectively. For residential land, the
marketization level of industrial land. However, based on the goal of prices were 39.6336 million yuan per hectare, 26.854 million yuan per
attracting investment and long-term regional economic growth, the hectare and 18.7586 million yuan per hectare, respectively, reflecting
selling price of “public tendering, auctioning and listing of quotation” that the local governments differ in their contingency selections of the
of industrial land was lower than that for commercial and residential types of transferred land.
land.
During the period from 2007 to 2016, the average selling prices for
industrial land for the public tendering, auctioning, and listing of 5. Conclusions
quotation methods were 3.3938 million yuan per hectare, 2.6916 mil-
lion yuan per hectare and 2.1733 million yuan per hectare, respec- The implementation of the tax-sharing reform in 1994 improved the
tively, while the average prices for commercial land were 31.8554 central government’s macro-control capabilities, but due to the mis-
match of the local government’s financial power, responsibilities, and
9
X. Fan, et al. Land Use Policy 99 (2020) 105023
financial resources, the scale of the local fiscal deficit continued to of local governments affect land marketization. Although we have
expand. Data show that the scale of local government fiscal deficits in provided theoretical explanations regarding the choice of different
2016 was as high as 7.31 trillion yuan, and the fiscal deficit of 99.65 % types of land transferred by local governments based on the con-
cities continued to expand. This is also an important reason why the tingency of financial pressure, a more systematic discussion is still
central government has further increased transfer payments and dee- needed to enrich our understanding of how the behavior of local gov-
pened tax reform in recent years. Facing the widening fiscal deficits, ernments affects urban land marketization. Second, further research
China has actively promoted the reform of urban land marketization may explore how local governments contingently choose different
(Xie et al., 2002; Lin, 2007), with the local government also playing an types, methods and amounts of land transfer by fully considering fac-
important role in this process (Li et al., 2015). The reform of urban land tors such as geographical location and the promotion of officials.
marketization is not only beneficial to local economic development but Finally, because local governments have not disclosed detailed data on
also an important approach for alleviating the financial pressure of extra-budgetary income, transfer payment, and land-related taxes at the
local governments. Therefore, we must focus on the socio-economic prefecture-level city level, further research is need to explore whether
effects of urban land marketization as well as include the important role local governments with scarce land resources have other local sources
played by government actions and institutions in the reform of urban of income available for them without the actual transfer of land parcels.
land marketization (Wei and Lin, 2002; Liu et al., 2014; Li et al., 2015).
However, compared with the policy research on the reform of the urban CRediT authorship contribution statement
land marketization, the nature and dynamics of the urban land market
have received little research attention (Yuan et al., 2019). Xin Fan: Conceptualization, Methodology, Software, Visualization.
This paper analyzes the spatiotemporal dynamics of overall and Sainan Qiu: Data curation, Writing - original draft. Yukun Sun:
individual types of land marketization in China from 2007 to 2016 Investigation, Validation, Writing - review & editing.
using 1.673 million pieces of land transfer data. During this period,
China's urban land marketization saw rapid growth, with an average Declaration of Competing Interest
annual growth rate of 1.89 %. The average annual growth rates of in-
dustrial, commercial and residential land were 3.79 %, 0.67 % and 0.05 The authors report no declarations of interest.
%, respectively. The land marketization level of residential land was the
highest, while the land marketization of industrial land was the lowest, Acknowledgements
a trend consistent with economic development and policy orientation.
At the same time, areas with higher levels of urban land marketization We thank the editor for the valuable comments and suggestions.
were primarily concentrated in key cities, such as those located in the This research was funded by the National Natural Science Foundation
southeast coastal area and the capitals of provinces. The distribution of of China (71703053), the China Postdoctoral Science Foundation
land marketization level in general is therefore consistent with regional (2018T110171, 2017M620080), and the International Innovation Team
economic development levels and population distribution. The urban Project of Philosophy and Social Sciences of Jilin University
distribution characteristics of the marketization level of commercial (2019GJTD03), and supported by the Fundamental Research Funds for
land and residential land are similar, but inland cities began to have the Central Universities (2722020JCG020).
industrial land marketization level. This trend implies that governments
should adapt to local conditions and implement land market reform, Appendix A. Supplementary data
especially industrial land market reform based on the location.
The empirical results using the spatial lag model show that the land Supplementary material related to this article can be found, in the
transfer strategies adopted by local governments are spatially inter- online version, at doi:https://doi.org/10.1016/j.landusepol.2020.
dependent. The increasingly close relationship between urban land 105023.
marketization and regional development may suggest that China's
urban land market is becoming more mature (Liu et al., 2016) and the References
strategic choice is the result of regional competition brought about by
decentralization. At the current stage of development, land finance Alonso, W., 1964. Location and land use: toward a general theory of land rent. Econ.
dependence is associated with higher levels of urban land market- Geogr. 42 (3), 277–279.
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and amount to be transferred based on contingency, and the con- pirical studies. Int. Regional Sci. Rev. 26 (2), 175–188.
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tribution rate of commercial and residential land is significantly higher
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11
Another random document with
no related content on Scribd:
—No, nada de champagne; primero a comer; el champagne lo
último.
Colocaron los fiambres en los mismos papeles grasientos que los
contenían, encima de una silla, alrededor de la cual se sentaron todos
Luis bebía más de lo regular y no le iba en zaga Perico Castro
Sánchez Cortina, colorado como un cangrejo cocido, requebraba y
galanteaba a las muchachas con ese atrevido y picante lenguaje de
los barrios bajos. Se le había saltado el botón del cuello, y mostraba
su pescuezo limpio de vello, blanco como el de una matrona de
Rubens. Petrita cantaba tientos y soleares a media voz jaleada po
Amalia, en tanto que Manolo Ruiz, borracho ya, se empeñaba en
referir a Cortina la historia de sus amores. Viendo que el diputado no
le hacía caso, fue a contársela a Perico; pero este, de un salto, se
plantó en el otro extremo del palco, gritando horrorizado:
—¡No, a mí no, por Dios!, cuéntasela a Luis.
—¡Ca!, a mí tampoco. Me la sé de memoria: «Paseaba una tarde
de junio con Antonio Pezuela, cuando vimos dos chicas muy monas, a
parecer modistas». Así empieza; ¿ves cómo la sé? Anda, cuéntasela a
Amalia que no la sabe.
Manolo se enfadó y los llamó groseros y mal educados. Después
sentose al lado de Amalia, y quieras o no quieras, le espetó la historia:
—«Paseaba una tarde de junio con Antonio Pezuela...».
La tal historia que, referida por cualquiera hubiera sido
sencillamente una vulgaridad, en labios de Manolo resultaba una
matraca horrible. El pobre muchacho no había conocido más pasión
que esta, y la idealizaba en su imaginación de artista, queriendo hace
a todos partícipes de aquellas tonterías que él apellidaba desengaños
y traiciones.
Por fin Amalia se enfadó también, y le echó con cajas
destempladas.
—¡Pues, señor, vaya una lata! Media hora de conversación para
decir que cuando la conoció llevaba la chica dos días sin comer, que la
convidó a un pollo con tomate; que agradecida al pollo le hizo caso
que tuvo con ella un chico, y que a los dos años se vio obligado a
mandarla a paseo porque se la pegaba siete veces por semana. Pues
hijo, paciencia y aguantarse... Haber tenido dinero. ¿Qué iba a hace
la chica con quince duros al mes?
Todos los presentes asintieron; Amalia tenía razón. ¿Qué iba a
hacer la pobre con quince duros?
Petrita fue la única que no estuvo conforme. ¿Qué iba a hacer?
Pues sufrir y pasar fatigas. ¿Había o no había cariño? Pues si le
había, ¿qué importaba lo demás? Cuando se quiere de veras, las
privaciones no se sienten. Lo sabía por experiencia. También ella
había pasado con su novio días muy malos, sin tener que comer, y
arropándose solo con una manta. Pero ¿y qué? Cuando tenían frío, se
pegaban el uno al otro; cuando no había que comer, se comían a
besos. Lo principal era el cariño. Aquella Luisa era una mujer sin
corazón, indigna de que ninguna persona decente la mirase a la cara
¡Ah, si ella hubiera encontrado un hombre así! Estaba visto; cuanto
peor se portaba una más la querían.
Se habían comido todo el jamón y bebido todo el montilla. Solo
quedaban dos o tres emparedados, algunas rajas de salchichón
esparcidas sobre los papeles, una botella de champagne y dos de
jerez.
Luis, pálido, muy pálido, con la barba apoyada en las manos y los
codos en la barandilla, miraba al salón. Sánchez Cortina parecía
próximo a sufrir un ataque apoplético. Castro desternillábase de risa a
ver las extravagantes muecas de Amalia a quien el champagne se le
había introducido por las narices, produciéndole un incómodo
cosquilleo que la hacía estornudar estrepitosamente, en tanto que
Manolo y Petrita, sentados en un rincón del antepalco, charlaban en
voz baja, con la animación de dos personas que empiezan a
entenderse.
Al compás de las notas de una habanera las parejas
balanceábanse torpemente en el salón sin mover apenas los pies, sin
cambiar de sitio, con la torpeza del cansancio, con la pesadez de la
fatiga. Desprendíanse marchitas la flores de las cabelleras
despeinadas y se desataban las cintas de los antifaces dejando ver las
caras borrachas. Era el penúltimo baile, si baile puede llamarse a
aquel torpe vaivén de cuerpos al compás de una música lasciva y
quejumbrosa. Las máscaras elegantes habían desaparecido. Algunas
volvían, con los abrigos puestos, a echar una última ojeada y se
quedaban de pie, en las puertas, esperando las primeras notas de
pasodoble final para marcharse. Solo se veían bebés de percalina
dominós de satén, pierrots baratos; alguno que otro mantón de Manila
que destacaba sus flores brillantes. Los bastoneros paseaban de un
lado a otro, retirando con el extremo de sus largos palos montones de
serpentinas enlazadas. Ya no llovía confetti, ya no se oían bromas
Las parejas caían fatigadas sobre los sillones. Los hombres charlaban
entre sí, graves, serios, formales, con las pecheras arrugadas, la
corbata deshecha, el aburrimiento en los ojos. El palco de Rose
d’Ivern estaba vacío. Las artistas del Petit Salon se habían marchado
Lola Guzmán oía embelesada la charla de un poeta melenudo con
cara de Cristo. Solo Rosarito seguía riendo como una loca, con e
caballero gordo, riendo siempre, siempre riendo con francas
carcajadas cristalinas.
Fue preciso despertar a Sánchez Cortina, que se había quedado
dormido sobre el diván. Entre Luis y Perico tuvieron que llevársele
cogido del brazo, como a un niño perezoso y mal criado, después de
haberle puesto al cuello la toquilla de Petra para que no se constipase
Castro se marchó con él en un coche de punto. Manolo fue en busca
de otro con Petrita y Amalia, y Luis echó calle del Arenal abajo, subido
el cuello del gabán, ladeado el sombrero, las manos en los bolsillos
tarareando el pasodoble, indiferente al frío y a la lluvia.
II