Political Circles and Land Supply for the Service and Industrial Sectors: Evidence from 284 Cities in China

Abstract

This study examines how political career incentives drive city leaders to strategically lease land to the service and industrial sectors within their terms of office and trigger political circles in land supply. Drawing on a comprehensive panel dataset covering 284 cities in China from 2006 to 2020, the results of panel regressions reveal a U-shaped correlation between mayors’ tenure in office and the quantity and proportion of land leased to the service sector for the 2006–2013 period, when economic growth was the overwhelming indicator of political performance. Newly appointed mayors are more motivated to stimulate long-term economic growth and supply more land to the industrial sector. As their tenure in office increases, mayors become less concerned with maximizing long-term economic growth and opt to lease more land to the service sector for immediate one-off proceeds. However, the U-shaped relationship has disappeared since 2013, when the cadre evaluation system was amended to prohibit using GDP growth as the primary criterion for evaluating local officials’ performance.