Operation Of Land To Form A "land Finance": Rational Choice Of Hybrid Local Government

Since China implemented the tax distribution system in 1994, the central government had completely reversed the passive situation of low revenue and enhanced the ability of the regulation and control of the economy before the reform. Now a lot of general view to the reason about formation of more and more "land finance" phenomenon is that the tax distribution system introduced in 1994, and even some studies show that the tax distribution system leading to the land finance is the "inevitable". One of their main points is that the national fiscal revenue was concentrated to the central government after tax distribution reform, and the fiscal expenditure of local government has not declined. When Local government faced the enormous financial pressure, they had to make money to solve the needs of financial expenditure, and in the end resulting in the "land finance".Through the case study of C City in Zhejiang Province found that the pressure led by tax distribution reform could be resolved by the way of tax rebates and transfer payments, while the results of the local government's efforts in increasing revenue and saving expenditure are significant. So the tax distribution system led to the land finance because of the finance pressure solved by the way of land transfer to get revenue is not reliable and convincing.By combining the analysis of the existing literature of Mayor's Office Meeting records and the theoretical analysis, the author put forward the local government after tax distribution reform is actually a mixed government. The local government does not fully implement the central policies and commands without any resources before Reform and Opening up, nor deeply involved in local economic development as an entrepreneur. The local government distanced itself from some economic activities and was a tax collector and service delivery one actually, in the meantime which firmly got hold of part of the monopolistic resources and participated in the economic activities. State-owned land as a resource, when it is used as mobile elements and scarce resources into the market, local government not only managed the land representative of the state, but also operating the land by means of market-oriented approach. The local government transferring the land and getting the benefits are the best choice. In particular, the local government can get the "chain gains" through land transfer is extremely attractive, which also contributed to the local government revenue land for the power motive.