Effect Of Land Finance On Economic Growth

China is experiencing economic booming since last century 90s, the GDP soars from worlds 7th to the second. During the period, average economic growth exceeded 10%, meantime, it is suggested the whole country is going through the economic transformation period, which leads to expansion of land finance and being one of the focal points in economic growth, and this relationship triggers a wide discuss in academic circles.This article will define the concept of land finance and economic growth and introduce theoretical basis of the form of land finance. Then it comes from local government’s perspective, based on the income and expense to give a related analysis. Depending on above information, the data is collected from 31 provinces in China from 1999 to 2011, with all applied economic growth model. It will illustrate from national level and local area level perspectives. The main conclusion is as follows:(1) Land finance mainly effect economic growth through two ways:1. Governments increases its income budgeting and as well as income not in this budgeting, then it will spend on infrastructure, in order to stimulate economic growth.2. Attracting capital inflow from outside and there stimulates economic growth. However the land finance will also lead to some negative effects on economic growth. It may causes the local fiscal risk, imbalance of the regional economic structural and create conflicts, etc.(2) From national level, land finance, private capital and budget income except land-related tax revenue are apparently have significant influence on economic growth. From local area level, land finance in east area has a greater positive impact on economic growth while not passing the significant test in mid area or west area. Private capital influencing on economic growth are greater in mid area than east area, and east area is the same as west area. Income budgeting other than land related tax revenue is greater in west area than east area, and east area is greater than mid area.Finally, according to the research above, there are two relative political suggestions:(1) Optimize the expenditure structure and improve the utilization efficiency of land finance and. (2) Improve the investment environment and actively help enterprises to enter local area. (3) Solve the negative problems of land finance. (4) Strengthen the investment of private capital, and expand fiscal revenue at the same time.