Efficiency and distribution of rural construction land marketization in contemporary China

Abstract

Since 2015, a national trial on rural construction land marketization has been conducted in 15 counties in China; this trial is regarded as the most significant step taken to date to reform the extant rural-urban dual land governance system. The trial aims to investigate the performance of an integrated rural-urban construction land market in facilitating land resource allocation efficiency and land revenue distribution equality. The objective of this paper is to understand the ongoing rural construction land marketization in China, with a particular focus on its efficiency and distribution effects. To this end, the theoretical model for rural construction land marketization is extended based on Tan, Qu, Heerink, and Mettepenningen (2011), a partial equilibrium model is developed for the empirical analysis, and recent rural construction land marketization practices in Deqing County, Zhejiang Province, are examined for empirical evidence. The study concludes that 1) rural construction land marketization indeed improves land allocation efficiency, and 2) rural construction land marketization also leads to a welfare gain for the rural sector, in particular by inducing redistribution effects from the urban to the rural sector.