Land Financial Analysis Of The Impact Of Urbanization

Land finance refers to a series of relevant financial incomes and expenses induced from the local government’s selling or pledging the right of land usage through the monopoly of the land market, the core content being the land-transferring fees. Ever since the implementation of state-owned land compensated transfer system, the incomes of the land-transferring fees of the local government has increased rapidly, accounting for a larger portion of the fiscal revenue. The land finance seems to have become the’’second finance". The large volume of land finance revenue prompts the local government on the path of "operating the city" through "operating the land". Such a pattern has pushed forward the economic development and ensued disadvantages at the same time: the scale of the city has extended out of order with serious waste of the land resources; many peasants have lost their land and jobs intensifying the social contradictions; it has induced the rent-seeking conducts relevant to land causing corruption; it has induced the disorder of the macro parameters such as the interest rate and the housing price and influenced the stable operation of the economy, thus impeding the further development of the urbanization.This thesis elaborates the following opinions based on the law of value and the market supply and demand theory:though the land finance has provided the initial fund for the preliminary economic development of the city, the government’s monopoly of the land market has induced the deviation of the price from the value and a series of consequences that impede the further development of urbanization. Eventually the price will return to the value and the land finance pattern will be hard to continue.On such a basis an econometric model is constructed with the usage of the panel data from30provinces, municipalities and municipals between1999and2009to an empirical regression of the relationship between land finance and other controlled variables and urbanization. The results are as follows:first, relationship between land finance and urbanization presents a reverse U shape, namely it has first stimulated and then stifled urbanization; second, the regression coefficient of other controlled variables (human resources capital, per capita fixed capital investment, GDP per capita, the level of the secondary and tertiary industry, per capita fiscal expenses, FDI) has further explained that the land finance pattern has made the urbanization lag behind the economic development and industrialization level in China.This thesis put forwards the following reform suggestions concerning the formation mechanism of the land finance and the requirement of urbanization: to reform the collective land usage system for a market-dominated land capitalization; to reconstruct official assess system for a switch from an economy-oriented government to a service-oriented government; to improve the public finance system and establish land property tax so as to provide stable sources of revenue for the government.