ZHAO Yanjing:"Justifying Chinese Local Government’s Land Finance Regime"

PPT

 

On April 13th, 2016, Professor ZHAO Yanjing of Xiamen University, Fujian, China gave a dynamic lecture entitled “Justifying Chinese Local Governments’ Land Finance Regime.” The talk focused on his most recent research on land finance and real estate from an institutional economy and dual economy perspective. Professor Zhao believes that, with the interpretation offered by dual economy theory, the problem of land finance as related to Chinese economic growth, real estate, and urbanization can be better understood.

Professor Zhao first acknowledged that land finance has been the engine of the booming Chinese economy for the last twenty years, and also the root of the decline of economic growth in recent years. In the first part of his lecture, he reviewed the history of land commercialization in China, which he gleaned from the socio-economic trajectory of Hong Kong. He concluded that the reason for adopting land finance was a result of lacking of goods and monetary resources. Professor Zhao used the equation of Revenue, Cost, and Surplus to explain the nature of land finance. It is not revenue for the local government. Rather, as land and housing prices largely consist of future revenue, it is constituted by debts. Nevertheless, local governments were in favor of land finance as its revenue is disposable.

In the second part of the talk, Professor Zhao pointed out that land finance is not sustainable, and as it is the driving force behind the Chinese economy, the engine propelling the economy has now stalled. Both the increasing cost of land requisition and decreasing demand of property has led land finance to its end. Unless a replacement of land finance is identified, the Chinese economy will lose the dynamic growth of the last two decades. Overall, this talk was a complex and engaging, using economic theory in dialogue with socio-economic trends to give a fuller picture of the past, present, and future of land financing and China’s economic growth.

--Waishan Qiu, MCP, STL Fellows

Speaker: ZHAO Yanjing 赵燕菁
Department of Architecture and Civil Engineering and Department of Economics, Xiamen University

Dr. Zhao Yanjing graduated from Chongqing University and obtained his doctorate from the Planning and Geography School at Cardiff University, United Kingdom. Zhao has extensive experience in urban planning and management issues in Chinese cities as he has both served as a chief planner for China Academy of Urban Planning and Design as well as the planning bureau director of one of China’s most livable and attractive cities, Xiamen.

He became the Director of Xiamen Planning Bureau in 2004.  Since 1984, Dr. Zhao has served at the China Academy of Urban Planning and Design, acted as the Director of China Academy of Urban Planning and Design Xiamen, and as Vice Chief Planner of China Academy of Urban Planning and Design. He was in charge of the Guangzhou Development Conceptual Planning, Shenzhen Urban Development Strategic Consulting Report, Xiamen Urban Master Plan, Sanya Urban Master Plan, Sanya Urban Development Planning, and Beijing Space Development Research. 

Widely known as an expert urban planner, Professor Zhao is also an editor of Urban Planning magazine and is a member of the council of Urban Planning Society of China. In 2015, Professor Zhao transitioned to a professorship at Xiamen University after he resigned from Xiamen Planning Bureau, where he had served as the Director since 2004.

Justifying Chinese Local Government’s Land Finance Regime

Land finance has been the engine of the booming Chinese economy for the last twenty years and also the root of the decline of economic growth. The nature of land finance is not revenue for local government. The nature of land finance is debts, and now the engine has stalled. Both increasing cost of land requisition and decreasing demand of property has lead land finance to its end. Since land finance is located in the core of Chinese economic growth, unless a replacement of it is identified, the Chinese economy will lose the dynamic growth of the last two decades. The problem is that we have not fully understood the economic functions of the land finance. However, dual economy theory may help us understand more and find a way out.

Recommended reading list:

From Urban Administration Towards Urban Management (2011)

Land Dispossession and Enrichment in China's Suburban Villages (2005)

Urban Planning from the Perspective of Institutional Economics (2002)