The Impact of Land Rent Seeking and Dissipation During Institutional Transition on China’s Urbanization

Abstract

Rapid industrialization and urbanization have ushered in drastic urban change in China since the 1980s. Along with the reform in land-use rights, emerging land rent is contested vigorously between the urban developmental state and the rural collective/urban danwei with socialist land-use rights in the context of institutional transition. The contests have entailed land rent seeking and dissipation and, consequently, impacted fundamentally on the newly built urban spatial structures, manifested by the suburban sprawl in the less dynamic regions, peri-urban fragmented land uses, and overcompaction of the central cities in the dynamic municipalities. The newly created landed interests based upon new institution of land leasing are embedded intricately within the urban spatial structure, which will generate “unearned rent increment” and “inflicted rent reduction” in the course of constant progressive urban change. Failure in addressing these two issues and equity between the two will stall continuous urbanization while rural–urban migration is still proceeding.