Local Government Land Finance Affecting Urban Economic Development

After the reform and opening—up, with the change of land use system and the reforms of tax system, financial sources of income in local government comes to rely on land.So land finance phenomenon has aroused wide attention .With the dramatic increase in land revenue, the proportion of land financial occupied local government fiscal budget increases. Gradually local governments depend on the land transfer deeply. The goal of this paper is to research the financial phenomenon, and the financial impact mechanism between land finance and urban economic .Based on the principles of land economics, finance, urban economics and real estate economics , the paper wants to quantify the degree and the way of the financial impact on the land finance to urban economic development. With the combination of Econometrics models and charts , the analysis of the economic impact of land finance was used in this paper. The relationship between land reveals and urban economic development was also researchde.We came to the conclusions as follows:1.The scale of the land finance developed rapidly in our country.The land finance is an important source of local government financial revenue. The land revenue in some places even more than the Fiscal revenue in budget.2. The revenue structure of land finance experienced a chang from agreement transfer to auction and listing transfer. The market value of the land continue to be reflected. And market forces gradually strengthened in land selling and pricing.3. The interaction mechanism between land finance and urban economic development exists. On the one hand, macroeconomic growth leads to the prosperity of the land market.With the increasing demand for the land element the price of land will continue to rise, which creates the financial preconditions increased the land finance; the other hand, the objective outcome of land market development caused by land finance will in turn promote the city's economic development.The increased land supply meets the demand for land elements in city economic growth.4. Land finance impact the urban economic development through mainly two specific ways.Firstly, in the early stage of land transfer, it required land expenditures, which directly increases the investment demand for the improvement of urban infrastructure and contributes greatly to regional economic development. Secondly, through the land price and land supply land finance has a direct and indirect effects on the development of the real estate industry. The real estate industry is an important part of China's national economic. It plays a significant role in GDP growth, urban fixed asset investment, construction industry and jobs employment. Through the conduction of real estate industry land finance affect the city's economic development .The policy proposals include : 1. a correct view of the phenomenon of land finance; 2. through the improvement of institution to stop local governments selling the land cheaply; 3. to actively seek for other alternative financial sources to replace land finance ; 4. regulate the use of land revenue.