Does where you are from affect how you land? Evidence from land transactions of Chinese manufacturers

Abstract

ABSTRACTLeveraging the unique matched land transaction and firm survey data, we empirically examine if firm ownership will affect the access to land factor for Chinese manufacturers. The state-owned firms display no advantage in paying less when acquiring land, while it is more costly for foreign-owned firms. Consistent with this finding, we find land acquisitions for foreign-owned firms are more likely to take place via the nonmarket-based transaction in the early stage of China’s land market reform with the goal of eliminating corruption. The research suggests that potential land miss-allocation (if any) could be resulted from ‘tax’ to the foreign firm rather than ‘subsidy’ to state-owned firms.