A Study On Land Competition Among Chinese Provincial Governments

Since China’s reform and opening up, the urbanization and the development of industrialization have started. Meanwhile, the demand for land and the scale of land transfer is growing rapidly. For a variety of reasons, the competitive behavior aimed at land transfer among local governments has come into being which may lead to a series of problems. Among them, the mechanism of how local governments affected by other competing governments and how to generate strategic interaction deserve attention and study. In addition, the land transfer for the industrial land and the residential is totally different and the difference of land revenue is very large. Besides, the competitive behavior aimed at land transfer is also different faced with different land categories. So I differentiate these two kinds of land, and study the strategic interaction of both kinds of land of local governments. As most of the current research literatures on land competition haven’t distinguish between different types of lands, and hasn’t explained the local government land competition from the perspective of strategic interactions, the paper has the practical and theoretical significance.I firstly sort the land transfer system, and then expound the connotation and extension of land finance and analyze the reasons for land finance caused by different kinds of lands. And then the theoretical analysis of the strategic interaction of different types of land is conducted. In the empirical analysis, I analyze the results of the theoretical analysis. There comes the conclusion that industrial land competition will eventually lead to a "race to the bottom" result, while the residential land strategy interactive result is rather vague, the residential land acts is significantly positively affected by the national real estate market boom level. On the basis of theoretical analysis and empirical testing, I propose some recommendations, such as a reasonable division of property rights powers, the partial power given to local governments to issue bonds, a hardened land revenue budget constraint, and gradually strengthening regulation of the real estate market by real estate taxes.