Land and public finance: traps and opportunities

Ran Tao and Jun Zhang

Chapter 11 in Handbook of Public Finance in China, 2026, pp 247-271 from Edward Elgar Publishing

Abstract: This chapter discusses the characteristics and deficiencies of the urban land-cum-finance regime governing China's process of industrialisation and urbanisation, and the pros and cons of the associated land-infrastructure-leverage model of local development. We review the process through which land became a key policy instrument employed by China's local governments in their industrialisation and urban development drive. Details are also provided regarding how the land-centric development model has manifested itself in the form of industrial park frenzy and housing bubbles. We argue that this poorly disciplined and seriously abused land-cum-finance regime, while enabling short-run economic growth and generating China's infrastructure splendour, has been largely responsible for excessive overinvestment, economic slowdown, escalating local debt crisis and rampant rent-seeking activities. Therefore, it is the barrier rather than booster to China's sustainable, long-run urbanisation and industrialisation.

Keywords: Land; Finance; Land-infrastructure-leverage; Local government debt; Local government financial vehicles (LGFVs) (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035311705
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