Land marketization, fiscal decentralization, and the dynamics of urban land prices in transitional China

Abstract

Urbanization and regional development in transitional China are land-centered, and urban land expansion has received substantial attention from researchers. However, the nature and dynamics of the urban land market remain understudied. Using a multi-scale framework of variables at both the land-parcel and city levels and a unique database of parcel-level urban land transaction records for 2008 and 2015, this study investigates the changing patterns and driving forces of urban land prices in China, paying special attention to land marketization and fiscal decentralization. We find that urban land prices in China have undergone an enormous but heterogeneous upswing during the past decade, reflecting differences in land types and geographical spaces. The results of multilevel modeling show that market forces are playing an increasingly important role in urban land leasing, although local governments are still having a significant impact on lease prices through their administrative hierarchy, choices of transaction methods, and decisions regarding land supply. Local governments tend to control industrial land prices and push up commercial and residential land prices to maximize their interests. This study broadens our understanding of the heterogeneous nature of land prices and the role of institutions in the urban land market in China.