Land quota markets in Chinese urbanization

1. MAKING LAND FLY
YUAN XIAO, PHD
NOVEMBER 14, 2016
Land Quota Markets and Growth Management in Chinese Urbanization

2. I. INTRODUCTION: NEW
PHENOMENON
2

3. 1 DENSIFICATION OF RURAL SETTLEMENTS
I. Introduction

4. 2 RECLAMATION OF RESIDENTIAL LAND FOR FARMING
I. Introduction

5. 3 TRADING OF “LAND QUOTAS” ON THE MARKET
Source: http://news.ifeng.com/gundong/detail_2011_07/29/8035871_0.shtml
I. Introduction

6. 4. WIDESPREAD PRACTICE AND INTENSE CONTROVERSIES
Source: http://www.travelchinaguide.com/map/
• 29 out of 31 provinces
in mainland China run
similar programs
• Chongqing Municipality:
670,000 households
resettled (2008 – 2013)
• Controversial:
à efficient or distorting?
à pro-peasant or
hurting peasants?
I. Introduction

7. TAKE A STEP BACK
Why study growth management?
Why study China?

8. II. THE RESEARCH
8

9. 1. RESEARCH QUESTIONS
As a new institution, how were the land quota markets
formed?
What are the impacts of land quota markets?
II. The Research

10. 2. LITERATURE REVIEW
Revisiting urban spatial economics
Extending fiscal federalism/socialism
Learning from theory of property rights evolution
Bridging studies of location-based land politics
II. The Research

11. 3. RESEARCH DESIGN AND DATA COLLECTION
11
II. The Research

12. III. INSTITUTIONAL
EVOLUTION:
CENTRAL CONTROL AND
LOCAL RESPONSES
12

13. URBAN LANDRURAL LAND
LAND MARKETS, PROPERTY RIGHTS,
AND PUBLIC FINANCE IN CHINA
• Partial marketization
peasants à government à urban land users
Leasing public landLand taking
Non market-based:
government uses
command and control
Market-based:
government leases land
use rights
• Local Governments Leverage Land Conversion to Finance Infrastructure

14. 1. DEVELOPMENT VS. PRESERVATION
Local Land Bureau
Municipal Government
Ministry of Land and Resources
Preserve Land!
(farmland protection + social stability)
Develop Land!
(fiscal revenues + economic growth)
Land Conversion
Quota System
III. Institutional Revolution

15. Urban Expansion with Official Quota Constraint

16. è Shortage of Quotas
Top-down Allocation of Quotas

17. 2 LOCAL RESPONSE: QUOTA CREATION THROUGH
RESIDENTIAL LAND CONSOLIDATION
III. Institutional Revolution

18. LAND USE CHANGES AT VILLAGE LEVEL
Source: Replication of Figure 7 in Yang 2011, How to Build a New Socialist Countryside. (Unpublished manuscript)
Before

19. LAND USE CHANGES AT VILLAGE LEVEL
Source: Replication of Figure 7 in Yang 2011, How to Build a New Socialist Countryside.
(Unpublished manuscript)
After

20. SPATIAL SCHEME OF QUOTA MARKETS

21. 3. CIRCUMVENT CENTRAL CONTROL
Local Land Bureau
Municipal Government
Ministry of Land and Resources
Preserve Land!
(farmland protection + social stability)
Develop Land!
(fiscal revenues + economic growth)
Land Conversion
Quota System
Land Quota
Markets

22. IV. IMPLICATIONS
22

23. IV. IMPLICATIONS
1. New Spatial Logics and Urbanization Pattern
2. Mixed Welfare Impact on Peasants depending on
Location
3. Reinforce the Dominance of the Municipality over
Counties

24. 1(a) New Spatial Logics: “De-spatialization” and
“Re-spatialization”
IV. IMPLICATIONS

25. • Same price of quota regardless of
generation location
• Remoteness, rather than
proximity increases the likelihood
of land consolidation
• The most rural areas get
densified first
1(a) New Spatial Logics: “De-spatialization” and
“Re-spatialization”
IV. IMPLICATIONS

26. URBAN EXPANSION WITH LOCAL QUOTA CREATION AND TRADING
Villages in deep rural areas are affected
IV. Implications
1(b) New Spatial Pattern of Urbanization

27. DISTRIBUTION OF QUOTA GENERATION PROJECTS BY
DEVELOPMENT ZONES IN CHENGDU
LOCATION
(Development
Zones)
JURISDICTIONS
(district/county)
NO. OF
PROJECTS
SIZE OF
QUOTA
GENERATED
(MU)
NO. OF
PEOPLE
DISPLACED
Total 20 735
(100%)
361,888.83
(100%)
1,389,522
(100%)
1st 6 urban 16
(2.2%)
11,437.61
(3.2%)
57,545
(4.1%)
2nd 6 suburban 244
(33.2%)
120,991.98
(33.4%)
533,852
(38.4%)
3rd 8 rural 475
(64.6%)
229,459.24
(63.4%)
79,8125
(57.5%)

28. DISTRIBUTION OF
QUOTA
GENERATION
PROJECTS BY
COUNTY IN
CHENGDU
Densification Deep in the Countryside

29. Two Types of Peasants Affected
on urban fringe
(quota use projects)
(-) more land taken, more peasants displaced
RURAL SUBURBAN URBAN
in deep rural area
(quota generation projects)
(+) better housing conditions, better
infrastructure and services
(-) lifestyle adjustment, impact on
mode of production
2 Mixed Impact on Peasants, depending on Location
IV. IMPLICATIONS

30. IV. IMPLICATIONS
Distribution of Official Quotas
3 Reinforcing the Dominance of Municipality over Counties
Distribution of New Quotas

31. Summary of Findings
• Flying land: rural densification for urban expansion
• Outgoing of land resources from rural to urban areas
• Mixed welfare impact on peasants, depending on
location
• “Municipality-managing-counties” structure
unsuitable for the urbanization era
• Reinforcing dominance of big cities over small cities
in land resources distribution

32. Thank you!
Yuan Xiao
yuanxiao@alum.mit.edu
yxiao@worldbank.org