Urban financialization in the shadow of the resource-constrained system: Uneven geography of local government bonds in Chinese cities

In the context of rising financialization, the US-style debt machine has increasingly dominated the theoretical interpretations of the nature and dynamics of urban financialization worldwide. This research identifies centralized resource constraints as a “missing mechanism” in understanding the uneven growth and spatiality of local government bonds (LGBs) in transitional China, where the provision of many key resources remained tightly controlled in the deep shadow of the socialist planned economy. In contrast to normal expectations, Chinese cities with a high extent of LGB indebtedness are more commonly found in interior and less-developed regions with immature markets. A regression-based analysis based on 326 Chinese municipalities from 2016 to 2021 indicates that the spatial variation of China’s LGB development is significantly influenced not only by the degree of inter-regional special-purpose transfers but also by per capita quotas for newly added construction land. In other words, local governments’ willingness to bear the debt-serving burden of LGBs is closely shaped by centralized constraints on budgetary resources and physical land resources. Addressing “the shadow of the resource-constrained system” as a missing mechanism has broad implications for enriching our understanding of the variegated nature and more-than-capitalist logic of urban financialization.