Land-based finance, fiscal autonomy and land supply for affordable housing in urban China: A prefecture-level analysis

Abstract

China’s booming housing market and the resultant skyrocketing housing prices in Chinese cities during the recent decade have led the Chinese government to step up its effort to provide affordable housing for low- and middle-income households. Despite the central government’s renewed policy focus on affordable housing program, the real pace of its development in urban China has been too sluggish to achieve its intended objective. Based on a panel dataset of land supply in Chinese cities at prefectural level and above during the period of 2009–2013, this paper examines the factors influencing urban governments’ commitment to land supply for affordable housing. It identifies an intriguing pattern characterizing the spatial mismatch between cities devoting a greater share of land for affordable housing and hotspot cities with severe housing affordability challenge. Cities with higher degree of dependence on land finance and higher level of fiscal autonomy were found to be less likely to devote land for affordable housing construction. The study suggests that the project of affordable housing provision in urban China cannot be successfully implemented unless local governments’ reliance on urban land-based interests are weakened.