Impact of rising industrial land prices on land-use efficiency in China: A study of underpriced land price

Abstract

Given China's large population but limited land resources, effective urban land allocation is a significant academic and policy concern. This study focuses on improving industrial land-use efficiency (ILUE) through the lens of industrial land price deviation (ILPD). We innovatively establish criteria for ILPD as a production factor and analyze its effect on ILUE, using data from 105 land price-monitoring cities in China from 2011 to 2019. Our findings show that China's industrial land prices (ILP) have been low, accounting for only 65 % of the land factor profit. Increasing ILP can enhance ILUE, but this effect weakens as underpricing improves. Especially in large and small cities, rising ILP eventually stops improving ILUE. A possible reason is that the marginal cost of land expansion due to rising ILP approaches or exceeds the marginal return, undermining market competitiveness and reducing ILUE. We also found that large cities are more resilient to increased industrial land costs than small cities. In the future, the Chinese government should address underpriced industrial land by guiding land prices to a reasonable level, considering moderation and heterogeneity.