Urbanization of Capital or Capitalization on Urban Land? Land Development and Local Public Finance in Urbanizing China

Abstract

This study examines the relationship between urban land development and municipal finance in a Chinese regional economy undergoing rapid urbanization. Drawing upon insights from the perspective of political economy, this study analyzes how municipalities in coastal Jiangsu Province have engaged in the land-dominated urbanization process, and the developmental landscape that has emerged from the new approach toward local public finance. Land development has not functioned simply as a passive outcome of urbanization, but has been actively pursued by local governments as a means of revenue generation to finance local economic growth. An inverse correlation is found between the growth of land conveyance income and the level of the regional economies in China's administrative hierarchy. We call for greater attention to be directed to the interrelationship between land development, local public finance, and urbanization in the ongoing transformation of the Chinese political economy.