Understanding local government debt financing of infrastructure projects in China: Evidence based on accounting data from local government financing vehicles

Helen X.H. Bao, Ziyou Wang and Robert Liangqi Wu

Land Use Policy, 2024, vol. 136, issue C

Abstract: This study develops an analytical framework to investigate the complex relationship between local government debt issuing for infrastructure financing, state control, land finance, and development activities in the private sector in China. Using local government financing vehicles’ accounting data, we find that local governments are working creatively to meet infrastructure development targets handed down by the central government. Moreover, local government financing vehicles became more responsive to development activities from the private sector in their debt-issuing decisions after the regulations of local government debt issuing in 2013/14. By modelling the effect of three distinct forces, i.e., the central government, local governments, and the market, in one unified framework, our study provides reliable evidence of how infrastructure financing works in China. Our research extends the studies of land finance into the infrastructure development domain. The findings are also helpful for studies on China's land use policy under its leasehold land right system, particularly the impacts of different land planning uses on infrastructure development.

Keywords: Urbanisation; Local government financing vehicles; Fiscal decentralisation; China (search for similar items in EconPapers)
JEL-codes: R51 R53 R58 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:lauspo:v:136:y:2024:i:c:s0264837723004301

DOI: 10.1016/j.landusepol.2023.106964

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