Land Financing-Led Urbanization in China: Evolution, Scale and Lessons

Abstract

The role of land financing in China’s rapid urbanization and economic development in recent decades has been much debated. This paper reviews and discusses the emergence and evolution of land financing both as a source of revenue and as a financing vehicle for local governments in China, and the contribution it makes to rapid urbanization in the country through its impact on the real estate sector. Urbanization as a possible independent driver for a country’s economic development is also discussed, using China’s case as a concrete example. The paper further touches on the possible reference value of the Chinese case to other countries, taking into account both the preconditions for a successful land financing strategy, and inherent risks with such a strategy. The contribution of land financing to local governments’ debt burden in China, which has recently been an international concern, is also discussed.