Land banking mechanism and its effects on urban development : a case study of Guangzhou, China

Abstract

Chinese cities have been experiencing significant growth and profound socioeconomic transition since late 1970’s. Reform and development on institution arrangement for land, which is one of the basic production elements, have been the core issue for the strategies of establishing market economy and urbanization.

Land banking was a mechanism initiated in western European cities for directing urban development in early 1900’s. Under this mechanism land is resumed by public authorized organizations and will be held for future use to implement public land use policies. Some Chinese cities began their own land banking operation in the 1990’s. After nearly 20 years of introduction of land banking mechanism to China most of the cities and counties are now practicing this mechanism in their land management and supply framework.

This study attempts to explore land banking mechanism and its effects on urban development comprehensively in lights of theories of new institutional economics and urban spatial structure applying the diachronic public policy analytical framework. Guangzhou, the third largest city and the first city to practice land banking mechanism, is taken as the study area. Spatial data for land supply records since introduction of land banking mechanism are collected and processed with GIS software. Archives in Guangzhou Construction Archive covering the land development and planning administration in Guangzhou were studied to facilitate in-depth understanding of the mechanism. Related statistics data, regulations, planning proposals, internal reports and were obtained to facilitate this study.

Review on evolution of land banking mechanism in China and comparison of related regulations at state and local levels argue that the introduction of land banking mechanism into China has lead to institutional changes in the land development process by integrating western experience and local characteristics.

Applying empirical transaction costs analysis on institutional models of major land supply mechanisms in China, this research illustrated that land banking mechanism has resulted in re-distribution of transaction costs of the land supply process, which reduces the transaction costs from the perspective land use right (LUR) users. However, for a specific case of land supply, overall transaction costs would increase under land banking mechanism compared to other land supply mechanisms.

Exploration on data collected through GIS analysis illustrated that land banking mechanism strengthens city government’s capacity to instruct changes in both macro level urban form and micro level built environment.

Analysis on statistics data and budgetary reports of Guangzhou Municipal Government demonstrates that with land banking mechanism gains of LUR conveyance are providing supplement income for the city government, which is approximately 30% of the traditional tax-based fiscal income. Financing values of Guangzhou city’s land bank are developed by land banking loans and establishment of the urban development financing platform. Supplement fiscal income and financing values of land banking greatly improve local governments’ leading role in urbanization process mainly through investment on urban infrastructures.

Case study on evolution of Liede village under land banking mechanism illustrates that different land development process and changes of urban form have also lead to rearrangement of socio spatial structure such as significant changes in residential spatial changes.