Urban expansion under the decentralization reform in China

Urban expansion is not only driven by market demand, but also a result of urban policy for land development and supply. A state-centred analysis for state structure is conceived to be helpful to understand local governmental behaviors in land development under the institutional context of "strong state and weak society".; Decentralization, not synonymous to marketization, means the transfer of administrative power and function from high levels to low levels in the study. In the decentralization reform of China, the localities' direct involvement in economic activities has not significantly separated from their administrative functions. Therefore, local bureaucratic entrepreneurialism has emerged.; As a result, localities have substituted the centre in developing local economy. Localities see land as their important resources to lure investment and collect self-raised fund.{09}Local governments intended to push land commercialisation in order to utilize the land within their jurisdiction as their resource. Without maximizing land exchange value urban expansion has been speeded up obviously by means of extensive land development.{09}The "development zone fever" emerged in the period of 1992--1994 is believed a result of the "soft-budget constraints mechanism".; Benefiting from its high autonomy, Shenzhen is the first city in China to introduce land market mechanism. Under the mechanism of soft-budget constraints, Shenzhen tended to construct its own development zones and to transfer land at negotiated price, so called "distorted market price" for the purpose of luring investment. The land development strategy successfully resulted in rapid urban growth of Shenzhen. With the development of the state-owned land in Shenzhen Special Economic Zone (SSEZ) in the 1990s, town and village governments in outer-SSEZ made use of collective land to construct their development zones for their community's interest. The municipality had to face both horizontally and vertically inter-governmental competition in land development. The result of extensive land development was a heavy loss of agricultural land and a high proportion of vacant land in suburban area.