Is Urban Land Development Driven by Economic Development or Fiscal Revenue Stimuli in China?

Land Use Policy 77 (2018) 107–115

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Is Urban Land Development Driven by Economic Development or Fiscal Revenue Stimuli in China?

T

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Cheng Shua,b, Hualin Xiea,b, , Jinfa Jianga,b, Qianru Chena a b

Institute of Ecological Civilization, Jiangxi University of Finance and Economics, Nanchang 330013, China Co-Innovation Center of Institutional Construction for Jiangxi Eco-Civilization, Jiangxi University of Finance and Economics, Nanchang 330013, China

A R T I C LE I N FO

A B S T R A C T

Keywords: Urban land development Economic development Fiscal revenue Population urbanization Land management China

Since the reform and opening-up, urban land development in China mainland has been increasing dramatically with significant regional differences. Using the panel data of municipal districts in 246 cities at the prefectural or higher levels in Chinese mainland from 2004 to 2014, based on the analysis of the differences in land development intensity in municipal districts, a model of factors affecting land development is built to verify whether the urban land development is driven by economic development or fiscal revenue from the perspectives of economic development and fiscal revenue. The conclusions are as follows: first, the intensity of land development varies significantly among municipal districts. The difference in the intensity of land development increases with the increase of city scale. The difference in the intensity of land development in central China is lower than that in eastern and western China. Second, the primary factors affecting the intensity of urban land development are economic growth, population urbanization, and population density. Finally, land transfer revenues also drive the land development in cities at the prefectural or higher levels to a considerable extent, which is proposed as “land finance” (local governments rely on the sale of land use rights to obtain extrabudgetary income to maintain local fiscal expenditure) in the literature.

1. Introduction Experiencing rapid urbanization, China is the largest developing country in the world. China’s urban economy has made great progress since the reform and opening-up in the late 1970s. Since the reform and opening-up, the proceeding of Chinese urbanization has led to a gradual increase in urban land area to meet the increasing demand for land in municipal districts. Since 1990, the Chinese government has issued a series of policies and regulations on land use, and it has endowed local governments with the right of actual control in the expropriation and development of rural collective land. In December 1998, the Regulations on the Implementation of Land Management Law promulgated by the state council stipulated that the municipal and county governments were responsible for the organization and implementation of expropriation of rural collective land. The gradual implementation of the Land Acquisition and Reserve System all over the country in 1997 had established the monopoly of local government in the primary land market within the jurisdiction, and further aggravated the expansion of land development in municipal districts. Since the beginning of the twenty-first century, with China’s further integration into global economy and the improvement of urban

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development, urban construction has been accelerating, as well as the land development in municipal districts. The amount of urban built-up land, served as an important input factor in the urban social and economic development process, has been increasing tremendously in recent years (Seto et al., 2011). China’s Land Use Control policy affects the change of ecological land into built-up land to a certain extent (Xie et al., 2017). In 1980, the area of urban built-up land in Chinese mainland was 6720 km2. In 2015, this area surged to 365,933 km2, with an average annual growth rate of 6.123% (Ministry of Land and Resources of the People’s Republic of China, 2017). The increasing rate of urban land in China is greater than that of population urbanization. As a result, many problems occurred. First, massive urban expansion has occupied large amounts of arable land and forestland resources, threatening food security in China (Bertaud and Renaud, 1997). In addition, as the main carrier of urban production activities, urban builtup land is influenced by most of the industrial pollutants. For example, the total area of industrial land in China was over 4500 km2 in China, accounting for about 19% of urban built-up land. However, the proportion in most developed countries is less than 10% (Ministry of Land and Resources of the People’s Republic of China, 2013). Moreover, the massive input of industrial land was accompanied by relatively low

Corresponding author at: Institute of Ecological Civilization, Jiangxi University of Finance and Economics, Nanchang 330013, China. E-mail address: [email protected] (H. Xie).

https://doi.org/10.1016/j.landusepol.2018.05.031 Received 1 March 2018; Received in revised form 10 May 2018; Accepted 14 May 2018 0264-8377/ © 2018 Elsevier Ltd. All rights reserved.

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are powerfully attracted by the booming economic development in a relatively developed city, and it leads to large-scale economic agglomeration in cities. The Report on China’s Migrant Population Development (2015) pointed out that, by 2020, the migrant population in China will gradually grow to 291 million, of which 220 million will be migrants from rural to urban areas (Lu and Xie, 2018). On the one hand, it improves urban economic development efficiency. On the other hand, it raises land demand, leading to further urban land expansion (Su et al., 2015). With regard to other economic influencing factors Harvey (1985), notes that profits were maximized because of the expansion of urban land, which is resulted from the capital investments. Seto and Kaufinan (2003) showed that the ratio of the output efficiency of agricultural land use to that of urban land use is the most important factor determining urban expansion. Other influencing factors include the monetary and time cost of commuting, urban population, industrial structures, urbanization, resident income levels, and fiscal decentralization etc. (Wheaton, 1977; McGrath,2005; Lu et al., 2011; Wong et al., 2005; Brueckner,2000). From the macroeconomic perspective, Seto et al. (2011) believed that the growth of per-capita GDP was the most important factor driving urban expansion in Chhina. Deng et al. (2010) found that economic growth played an important role in driving urban expansion. Other scholars have explored the effects of macroeconomic policies, for example, industrialization, investment, construction of basic transportation infrastructure, and urban planning policies on land development (Liu et al.,2005; Xu and Zhu, 2008; Yang et al., 2017). The governments are the main leaders of urban construction in China. Governments’ revenue and other relevant fiscal factors will greatly affect the speed of urban construction and urban land expansion (Yang et al., 2017). Some studies have analyzed the effect of fiscal factors affecting urban development. Logan and Molotch (2007) argued that urban land expansion was mainly dominated by political, commercial, and economic elites who sought for the “exchange value” of land. Lin and Wei (2002) suggested that fiscal decentralization, marketization, and globalization together promote the urban land expansion in China. Wu (2003) believed that in the process of transforming from production-oriented governance to entrepreneurial cities that sought for fiscal revenue balances, cities in China should manage land transfer revenue to adapt to the decentralization of Chinese government and the marketization of service functions. Qian and Roland(1998) proposed the hypothesis of “Federalism with Chinese Characteristics”. According to the hypothesis, the reform of tax-sharing system that “withdraw financial power from local governments while duties and responsibilities remain” strengthened the centralized fiscal power of central government, while resulted in large fiscal gaps in the fiscal revenue and expenditure of local governments. In this case, local governments, especially urban governments, had to raise funds by themselves to maintain economic growth, and land transfer revenue became the primary source of extra-budgetary revenues. Furthermore, some scholars have explored this topic from the perspective of land finance. In their view, under the current tax-sharing framework, urban land development directly increased the fiscal revenues of local governments, and urban land development has entered a rapid cycle (Wang et al., 2010; Huang et al., 2013). Although the above studies both home and abroad have laid a basis for the systematic study of factors affecting urban land expansion in China (Tan et al., 2005a,b), there remains some limitations. For example, the pre-assumption that land development was driven by fiscal revenue, exploring the impact of specific factors on land finance from a single perspective, and using the data of cities at provincial or prefectural levels to conduct empirical analyses. Therefore, based on analyzing the overall trends and regional variations in urban land development in China, adopting a comprehensive model including indexes such as economic development, urbanization, fiscal self-sufficiency, and fiscal revenue, in this paper we analyzed whether the urban land development in China was driven by economic development or

economic efficiency. To be specific, the industrial GDP generated by per unit industrial land is much less than that in developed countries (Xiong and Guo, 2013). Urban land use is of great importance for urban development in China, and the effective use of urban land is very important for sustainable city management (Halleux et al., 2012). As economy in China develops, people get richer and they have stronger willingness to pay for environmental protection (Shao et al., 2018). It is a key issue for China to improve both industrial land use efficiency and environmental eco-friendliness in the realization of economic sustainable development (Zhang et al., 2015). As planners of urban development, local governments are responsible for the organization and preparation of urban plan. Therefore, how to effectively control urban land expansion and achieve sustainable urban land use are of great importance. Moreover, an important premise of this work is the overall understanding of development trends, regional differences and influencing factors of urban land expansion, which are illustrated in this paper. Furthermore, if land development in municipal districts is driven by economic development, a differentiated land supply policy should be formed according to local economic development. If land development in municipal districts is driven by fiscal revenue, the intergovernmental distribution mechanism of fiscal revenue should be reformed (Liu and Alm, 2016). This would ensure that local governments would no longer carry out land development driven by fiscal revenue. However, excessive land development in municipal districts results in declining land use efficiency and outputs (Triantafyllopoulos, 2017). This leads to the inefficient use of urban infrastructure and related services, which cause severe effects on the sustainable urban land use and biodiversity, and the encroachment of farming and ecological land. Thus, the analysis on the spatial and temporal variations in the land development intensity in municipal districts of China is carried on to examine whether urban land development is driven by economic development or fiscal revenue. It provide key scientific basis for the policy recommendations aiming at rationally controlling land development intensity in municipal districts. In addition, it is of great significance to rationally control intensity of urban land development, improve land use efficiency in municipal districts, and keep the necessary cultivated land and green ecological space in the urban area for the improvement of the livable level in municipal districts. 2. Literature review With the rapid urban land development around the world, many studies have analyzed the mode, the trend, the regional differences and the determinants of urban land expansion at the national, regional, provincial and city scales (Gibson et al., 2015; Wei et al., 2017; Gao et al., 2014; Chen et al., 2016; Xie et al., 2018a). Shao et al. explored the effect of high-speed rail (HSR) on service industry agglomeration (Shao et al., 2017). Some researchers argue that we should pay more attention to the social, economic and ecological problems caused by the rapid expansion of urban land, which may have seriously hindered the sustainable urban development (Li et al., 2014). Tan et al. (2005a,b) believed that the rapid urban land expansion, especially in many developing countries, has become the main reason that leads to frequent environmental problems and unbalanced regional economic development. Additionally, we need to adopt targeted policies through analyzing the regional differences in urban land expansion as urban development and social economic situation in different regions are quite different (Kityuttachai et al., 2013). Therefore, in order to bring forward effective policy recommendations and realize sustainable urban development, it is very important to analyze the development trend of urban land expansion at national and regional levels and explore its influencing factors. Regarding the driving factors of urban land expansion, regional economic development and local government finance are two major contributors (Li et al., 2017). Due to hige income gap, migrant workers 108

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fiscal revenue by using the panel data of municipal districts, which were the core regions of urban land development in China. More importantly, most of the relevant studies are concentrated on specific cities and rarely focus on hundreds of cities across the country. Besides, few studies explicitly explained how the economic and fiscal driving factors affected urban land expansion. With a vast territory, the differences in social and economic development between regions are notable. Ignoring the differences may lead to unreasonable urban development policies (Hao et al., 2016). In addition, lacking calculation on the regional differences of urban land expansion intensity, only descriptive analyses were available in previous studies. Detailed empirical analysis helps provide academic support to the government in the formulation of urban development strategies. This paper contributes to the study of China's urban land expansion in three folds. First, the Theil index is adopted to analyze the regional differences in urban land expansion, and it is decomposed into two subindicators to determine the main driver of the regional difference in urban land expansion. Second, several relevant influencing factors are selected from economic and fiscal perspectives to analyze how they affect Chinese urban land expansion based on a panel data regression. Third, some targeted policy implications are proposed based on the empirical analysis. The following questions are addressed in this study.

behavior influencing urban development in China, it mainly includes the financial self-sufficiency and the land transfer revenues. Fiscal selfsufficiency rate is an important index to determine whether a city’s development is healthy. Cities with a high fiscal self-sufficiency rate have a relatively low motivation to seek additional income from sources such as land transfer revenues. In addition, these cities have stronger autonomy in fiscal expenditures. Cities with a low fiscal self-sufficiency rate are more dependent on additional revenues, such as transfer payments from central governments and land transfer revenues. Additionally, they have lower autonomy in fiscal expenditures (Scheidel et al., 2013). Local government officials face enormous pressure in their political performance evaluations (Xie et al., 2018b). Under the current tax-sharing framework that “withdraw financial power from local governments while duties and responsibilities remain”, stable local revenue systems is lacking, and local governments have to seek extra-budgetary revenue from other sources, such as land transfer revenues, to support the increasing massive local fiscal expenditures (Qian and Roland, 1998; Lin and Wei, 2002; Wu, 2003, 2002; Scheidel et al., 2013). Due to the soft constraints of local government budget and the benchmark competition of economic development, the land transfer payment revenues of local governments would quickly be converted into local government expenditures. The fixed local government expenditures would lead would lead local governments to further develop land and seek more land transfer payment revenue. It is reflected by the policy of “adjustment of administrative divisions” that change counties into municipal districts promoted by municipal governments to gain land development right in a wider region (Logan and Molotch,2007; Wang et al., 2010; Huang et al.,2013; Yang et al.,2017). Considering the above theoretical analysis, data availability and accessibility of technology, five factors, namely, gross domestic products (GDP), population urbanization level(UPL), population density in urban area (PDU), fiscal self-sufficiency rate (FSR), land transfer payments revenue (LTPR), are selected as the preliminary framework for influencing factors of urban land development in 2004–2014 (Fig. 1).

(1) What is the overall situation and dynamic change in the urban land expansion in China? Are there obvious regional differences? (2) What is the trend of the two decomposition indicators of Theil index, i.e., inter-group difference and intra-group difference? And which one is the main driving factor of urban land expansion? (3) Between economic development and fiscal revenue, which one is the main driver of urban land expansion in China? What are the effective ways to optimize present urban development strategies in China? The remainder of this paper is organized as follows: Section 4 introduces the methods and materials. Section 5 presents the empirical results, and Section 6 concludes with a discussion on policy implications.

4. Method and material

3. Theoretical framework

Under the above theoretical framework, constructing a metric model equation, this paper adopts Theil index to analyze the spatial and temporal differences in urban land development. Besides, the paper explains the definition and source of the variable and makes a statistic analysis on the variable data.

Previous studies have shown that being a complex evolutionary process, urban land development is mainly influenced by economic development and government's profit-seeking behavior (Kityuttachai et al., 2013; Li et al., 2017). In terms of factors with regard to the economic development inflencing the urban development in China, it mainly includes economic development, population urbanization and urban population density.A region with larger economic scale and scope, along with established factor endowment, transportation conditions, and tax policies is more attractive to outside populations and capital flows. It stimulates the government to implement land development and construct industrial areas, commercial areas, and supporting facilities (Harvey,1985; Seto and Kaufinan, 2003; Deng et al., 2010; Seto et al., 2011; Wong et al., 2005; Kityuttachai et al., 2013; Vasenev et al., 2018). With the growing of population and urbanization, the urban land expansion brought about by urbanization has become an important characteristic for land use. Currently China is experiencing rapid economic development (Jedwab et al., 2017). Protecting land supplies for urbanization and basic infrastructure is a necessary requirement for population urbanization (Su et al., 2015; Jedwab et al., 2017). Among the various human activities, land development is a particularly important demographic factor affecting land use. In areas with high population density, it is usually necessary to carry out large-scale land development to satisfy residents’ production and lifestyle demands (McGrath, 2005; Leibowicz, 2017). In terms of factors with regard to government's profit-seeking

4.1. Theil index In terms of the research methods for estimating regional differences in urban land expansion, the Theil index is adopted because of the following two advantages: first, it can illustrate the trend of overall regional differences; second, it can be decomposed into two indicators, namely, inter-group difference and intra-group difference, to reflect the sources of regional differences accurately (Sinha, 2017).This study uses

Fig. 1. Theoretical Framework. 109

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the Theil index to characterize the spatial and temporal differences in the land development intensity in Chinese municipal districts. The range for the Theil index is 0–1. A higher Theil index value indicates a greater degree of variation. It is calculated using the following formula: I

T = Tb + Tw =

∑ i=l

Yi ⎛ Yi / Y ⎞ + ln Y ⎝ Fi / F ⎠ ⎜

⎟

I

∑ i=l

Yi Y

J

∑ j=l

Yij / Yi ⎞ ln ⎛⎜ ⎟ Yi ⎝ Fij / Fi ⎠

Table 1 Descriptive Statistics and Variables’ Analysis.

Yij

(1)

where T denotes the Theil index value, Tb denotes the inter-group difference in land development intensity, Tw denotes the intra-group difference in land development intensity, I denotes the number of groups separated according to the characteristics of the 246 prefecture-level and above cities’ municipal districts, and J denotes the number of cities included in large groups. Yi/Y is the ratio of built-up land use intensity of cities in the group i to that of all cities. Fi/F is the ratio of area of the municipal districts in area i to the overall intensity of all municipal districts. Yij/Y is the ratio of the intensity of built-up land in the j-th city in the group i to the total intensity of built-up land in the group. Fij/Fi is the ratio of intensity of the municipal district in the j-th city in the group i to the overall intensity of municipal districts in the group.

Variable

Unit

Mean

SD

Min. Value

Max. Value

LUDI GDP LTPR FSR UPL PDU

% Yuan 10 Million Yuan % % People/km2

8.277917 38920.74 65.13293 57.0229 60.22495 961.9166

9.783317 27674.11 143.0171 25.3757 24.5705 995.8938

0.02 1874 0 2.2808 11.2018 13

97.18 266136 2027.604 258.7054 100 14052.41

4.3. Data This study uses panel data of municipal districts in 246 cities at the prefecture or higher levels as the research sample. In the above cities, 100 cities are located in the eastern region, 86 cities are located in the central region, and 60 cities are located in the western region. To unify the res earch dimension, some variables are converted through logarithmic transformation in the empirical model. Data on the land transfer payments revenue (LTPR) in this study is collected from the China Land & Resource Almanac. Data on land development intensity (LUDI), gross domestic product (GDP) and fiscal self-sufficiency rate (FSR) is sourced from the China City Statistical Yearbook, and annual regional population data(UPL, PDU) is sourced from the China Population and Employment Statistics Yearbook. Data on consumption price deflator is derived from the China Statistical Yearbook of Regional Economy. Table 1 presents the descriptive statistics for all variables in this study. Table 1 shows a relatively large variation in the dependent variable with regard to the land development intensity in cities at the prefectural or higher levels. Meanwhile, a relatively large variation is observed in the variables with regard to local economic development, population density, population urbanization rate, and land transfer payments. In addition, each variable passes the unit root test and generalized likelihood ratio test, indicating that the data meets the conditions of a stationary time series and autocorrelation is not existed.

4.2. Influencing factors The following measurement model equation is to analyze the effects of factors, such as economic growth, population urbanization, population density, land transfer revenues, and fiscal self-sufficiency on urban land development intensity: LUDIit = β0+β1 ln GDPit + β2 ln LTPRit + β3 ln FSRit + β4 ln UPLit+ β5 ln PDUit+εit (2) Where LUDIit refers to the proportion of urban built-up land area to total urban land area. In line with existing research, we select the following variables from the perspectives of economic development and fiscal revenue

5. Empirical results

4.2.1. Economic development factors We select gross domestic product (GDP) to represent the regional economic development level. We use the logarithm of municipal districts’ GDP to reflect economic development level to observe the empirical effect of economic development on land development. The logarithm of population urbanization level (UPL) is selected to represent population urbanization. Based on the above analysis, this study uses the logarithm of population urbanization level to examine the urbanization process, which is defined as follows: population urbanization rate = non-agricultural population in municipal district/ population in municipal districts at the end of the year. We select the population density in urban area (PDU) to explore the influence of population migration on urban land expansion. In this study, population density = population of the whole city at the end of the year/ land development area in municipal districts (people/km2).

Based on the data from the China Land & Resource Almanac, in term of spatial characters, the expansion of the municipal districts in China is decreasing from coastal to inland areas, and the expansion is extending from metropolis to small cities. For example, the scale and speed of urban land expansion in coastal areas are larger than those in inland areas. The expansion scale in municipal cities is larger than that in small towns. The expansion scale of municipal districts in urban cluster areas is larger than that in non-clustered areas. 5.1. Municipal district land development for Chinese cities, 2004–2014 Since the market-oriented economic system reform and the implementation of the opening up policy in 1978, the urban built-up area in municipal districts has been increasing sharply, especially in eastern coastal areas, where the expanding scale and speed have been unprecedented (Fig. 2) . Since the middle of 1980s, as the reform of land use policies, urban expansion in China has been accelerated. In 1990s, with the acceleration of industrialization, the urbanization in China developed fast. Meanwhile, a large quantity of farmland was transformed into urban land due to population urbanization (Schneider et al., 2005). Because of special national conditions in China, regional differences in urbanization varies greatly in China, namely, that in coastal areas is faster than that in central and western areas, and that in the southeast regions is faster than that in the northeast. In general, city clusters with better basis develops faster than other regions. In terms of administrative levels, urban expansion in China primarily occurs in cities at prefectural or higher levels, and the expansion

4.2.2. Fiscal revenue factors We select the fiscal self-sufficiency rate (FSR) to test the effect of local government revenue and expenditure on urban land expansion. This study assumes that land development intensity is greater in areas with low fiscal self-sufficiency rate. Further, fiscal self-sufficiency rate = basic local budgetary incomes/basic local budgetary expenditures. We select land transfer payments revenue (LTPR) to represent the income that local governments gain from land levies, land development, and land transfers. In this study, we use a municipal district’s annual revenue from land transfer payments revenue to reflect the local governments’ land finance activities. 110

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Fig. 2. Land Development in Chinese Cities: 2004–2014.

eastern coastal areas is larger than that in central areas, and that in western areas is the smallest. From 2004–2014, the proportion of eastern, central and western expanded urban built-up land area to the total expanded urban built-up land area in municipal districts is 47.97%、29.99%、22.04% respectively (Fig. 4). In terms of city clusters, urban expansion in China is mainly concentrated in several relatively mature urban groups or urban belts. During the 11 years from 2004 and 2014, the proportions of expanded urban built-up land area in Beijing-Tianjin-Hebei Region, Yangtze River Delta city groups, Pearl River Delta city groups are 38.09%、65.65%、 84.81% respectively. Moreover, the expanded urban built-up land in the three city groups accounted for 61.57% of the total expanded urban built-up land area in China (Fig. 5).

is slow in county or lower cities. The ratio of built-up land area in cities at prefectural or higher levels to the total urban built-up land area in all cities and towns rose from 68.6% in 1998 to 81.48% in 2015. In terms of urban scales, urban expansion in China is mainly concentrated in major metropolitans or megacities. The larger the city scale is, the faster the urban land expands. From 2004–2014, the expanded built-up land in municipal districts of China amounted to 9011.22 km2. Among which, the expanded built-up land area in the 17 metropolitans (in which the urban resident non-agricultural population is over 5 million), including Beijing, Tianjin, Shanghai, Chongqing, Wuhan, Guangzhou, Shenzhen, Xi’an, Chengdu, Nanjing, Suzhou, Harbin, Hangzhou, Shenyang, Shantou, Dongguan, and Foshan, amounted to 54,433 km2. Especially in megacities including Beijing, Tianjin, Shanghai, Chongqing, Wuhan, Guangzhou, and Shenzhen, the expanded built-up land area reached 3197.7 km2, accounting for 58.85% of the total expanded built-up land area of the 17 metropolitans (Fig. 3). In terms of regions, the expanded urban built-up land area in

Fig. 3. Cites’ Municipal Districts Land Expansion in China: 2004–2014. 111

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Fig. 4. Land Development Intensity of Cites’ Municipal Districts in China: 2004, 2009, 2014.

5.2. Regional differences in land development in municipal districts of China from 2004–2014

eastern, central and western regions, and the contribution rate of regional difference to the overall difference are derived (Table 2). Table 2 shows that, from 2004 to 2014, the average Theil index for land development intensity in municipal districts of China is 0.3349, illustrating that the difference in the land development intensity among municipal districts is obvious. Furthermore, the Theil index exhibits a declining trend with the exception of the individual year, indicating

5.2.1. Overall difference in the land development intensity of municipal districts According to Formula (1), the Theil index for land development intensity in municipal districts of China, regional differences among

Fig. 5. Cites’ Groups Municipal Districts Land Expansion in China: 2004–2014. 112

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Contribution Rate to IntraRegion Variation

eastern and western China is larger than that in central China. However, this result is inconsistent with the study conclusions of Zhao and Liu (2013), whose samples are 222 cities at the prefectural or higher levels from 1997 to 2009. The different results show a new trend in the changes in the land development intensity of municipal districts in China. 6. Analysis on influencing factors

Table 2 Contribution Rate and Theil Index for Land Development Intensity in Chinese Municipal Districts, 2004–2014. Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Theil Index

0.875363 0.240863 0.110455 0.241479 0.244061 0.375053 0.243972 0.779187 0.223622 0.205142 0.19519

Contribution Rate to Overall Variation

InterRegion Variation

IntraRegion Variation

Eastern China

Central China

Western China

5.40% 0.32% 0.22% 0.26% 0.44% 0.65% 0.08% 4.14% 0.28% 0.39% 0.44%

94.60% 99.68% 99.78% 99.74% 99.56% 99.35% 99.92% 95.86% 99.72% 99.61% 99.56%

12.23% 43.81% 33.54% 59.34% 44.62% 48.34% 41.99% 13.12% 41.04% 41.59% 43.46%

5.00% 15.03% 25.42% 14.44% 15.55% 30.51% 21.43% 7.42% 24.16% 22.99% 26.51%

82.76% 41.16% 41.05% 26.22% 39.83% 21.15% 36.58% 79.46% 34.80% 35.42% 30.02%

The above analysis shows that there are obvious differences in the land development intensity of municipal districts in China during the study period. The expansion of urban built-up land will be directly reflected by the increase of land development intensity of municipal districts. Existing studies have shown that factors such as economic conditions and population are the main reasons for the expansion of urban built-up land. Therefore, by adopting an econometric model, the study aims to analyze the influence of factors such as economic growth, population urbanization, fiscal self-sufficiency rate, land transfer revenues, and population density factors on land development intensity, and reveal the intrinsic reasons for the difference in urban land development intensity. In this study, software STATA 14.1 is adopted to estimate the results of panel data of municipal districts in 246 cities at prefectural or higher levels from 2004 to 2014. Based on the results of Hausman test, we find that the basic assumptions for random effects model are not satisfied, so the fixed effects model is adopted. To avoid the effects of heteroscedasticity between individuals, we perform a feasible generalized least squares (FGLS) estimation. Taking land development intensity as our dependent variable, different estimation results of models are obtained (Table 3). Table 3 reports the analysis results of regression model on influencing factor of land finance. To avoid multicollinearity, we employ the stepwise regression method. Models 1–2 report the effects of economic growth and fiscal revenue on land finances, and Model 3 is a regression model for the whole influencing factors. Table 3 shows the statistical results. In terms of t-value, most variables in models 1–3 haven pass the significance tests after eliminating the effects of autocorrelation. With relatively stable estimation coefficient of each variable and good estimation effect, the explanatory power of the model is strong In Model 1. Fiscal revenues such as land transfer revenues and fiscal self-sufficiency rate are included as independent variables. The statistical results show that land transfer revenues has a significantly positive influence on the land development intensity of municipal districts, and fiscal self-sufficiency rate have a significantly negative influence on land development intensity (β = 0.4538985, p < 0.01; β = −1.477877, p < 0.05). In Model 2, economic development factors such as local economic development levels, population density, and population urbanization rates are

that the difference in the land development intensity among municipal districts in this period is decreasing. This is consistent with the findings of Tan and Lu (2013) and Zhao and Liu (2013). Between 2004 and 2014, the Theil index for land development intensity in municipal districts fluctuates greatly, and it is affected by economic development in municipal districts, population urbanization rates (proportion of urban population to total population of the region), population density, fiscal self-sufficiency levels, and land transfer revenues etc. Determining the influencing degrees of the above factors is the empirical objective of this study (Fig. 6).

5.2.2. Greater contribution rate of intra-region difference in urban land development intensity to overall difference Considering the decomposition of contribution rates for overall difference in the land development intensity among municipal districts, the contribution rate of inter-region difference in the land development intensity of municipal districts in eastern, central, and western China is far less than that of intra-region variation. This indicates that the primary reason for difference in the land development intensity of municipal districts is intra-region difference. Considering the contribution rate of intra-region difference in eastern, central, and western China to overall intra-region difference, the contribution rate in the land development intensity of municipal districts in eastern and western China to overall intra-region variation is relatively greater, while that in central China contributes less.This indicates that the intra-difference difference in the land development intensity of municipal districts in

Fig. 6. Theil Index Inter- and Intra-regional Intensity Variation for Urban Municipal Districts Land Development Intensity in China: 2004–2014. 113

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to land development intensity. This may be because that the fiscal selfsufficiency rates defined in this paper refers to the ratio of the local fiscal revenue within general budget to local fiscal expenditure within general budget, and the land transfer revenues of municipal districts which belong to extra-budgetary revenues in not included. Therefore, the driving effect of economic factors on urban land expansion is more than that of fiscal revenue factors on urban land expansion. The coefficients of lnGDP and lnUPL are much greaters than those of lnLTPR, and the coefficient of FSR is negative. Therefore, we should pay more attention on economic factors to improve urban land development in China. In particular, we should emphasize the quality of economic development rather than the quantity, and try to avoid the blind growth of urban population.

Table 3 Model Estimation Results. Estimation Model

Model (1) Fiscal revenues variables only

Model (2) Economic growth variables only

Model (3) Economic growth and fiscal revenues variables

lnGDP

–

lnLTPR

lnUPL

0.4538985 (6.03***) −1.477887 (−2.23**) –

1.456022 (10.46***) –

PDU

–

Constant

7.778267 (17.32***) 0.0166 2,706 246

1.437964 (3.20***) 0.004989 (38.45***) −10.67843 (−7.02***) 0.3918 2,706 246

0.9877823 (4.30***) 0.2502408 (2.55**) −0.493482 (−0.94) 1.552786 (3.44***) 0.0049814 (38.37***) −6.449584 (−2.77***) 0.3937 2,706 246

17.85

17.85

17.80

FSR

R-squared Number of obs. Number of groups F-statistic (Wald x2value)

–

7. Conclusions and discussions Based on the panel data of municipal districts in 246 cities at the prefectural or higher levels in Chinese mainland from 2004 to 2014, the study aims to study the spatial and temporal disparities of urban land development intensity and the influencing factors. The conclusions are as follows. First, land development intensity of municipal districts in different cities varies greatly. In terms of spatial distribution, the land development intensity is characterized by obvious spatial agglomeration. For example, the land development intensity in Yangtze River Delta city groups, Pearl River Delta city groups, and Beijing-Tianjin-Hebei Region are high. The land development intensity varies in eastern, central, and western China, as well as in cities with different administrative levels and scales. The difference in land development intensity in central China is less than that in eastern and western China. In general, the land development intensity in large-scale cities are relatively high. Moreover, the larger the city scale is, the larger the difference in urban land development intensity is. Second, economic development factors such as economic growth, population urbanization, and population density are the primary factors influencing urban land development intensity. This study shows that the faster the economic development grows, the more funds the government would obtain to invest in the construction of urban infrastructure, and it would accelerate the rapid expansion of urban built-up areas in municipal districts. Shape disturbances of Theil decomposition in 2004 and 2011 (Fig. 5) reflect the impact of economic development on urban land development intensity brought about by macro-control policies in 2004 (from positive fiscal policy to prudent fiscal policy) and the macro-control policies (larger-scale positive fiscal policies) in 2010. Meanwhile, economic development is conductive to the promotion of residents' income and consumption capacity, thereby stimulating the demand for built-up land for residential, commercial and public facilities etc. As the improvement of urbanization, more and more people concentrated in cities, thus elevating population urbanization levels and population density. This would lead to an inevitable expansion in urban built-up land, thus continuously reinforcing the urban land development intensity. Third, land transfer revenues promote land development of municipal districts in cities at the prefectural or higher levels largely. Local government revenues within budget such as tax revenue is of strong budgetary constraint, and it is difficult to adjust in annual expenditures. However, revenues such as land transfer revenues are of soft budgetary constraints, and they can be adjusted according to government expenditures. In this way, land development of municipal districts is influenced by land transfer revenues, which is also known as “land finance” proposed by Chinese scholars. Finally, in view of the commonly high urban land development intensity in China, to reasonably control the urban land development intensity, differentiated management and control strategies should be adopted in future according to the economic, population and industrial conditions in cities with different scales or in different regions. In

Note: Parenthetical values are t−statistics. Note: ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively.

included as independent variables. The statistical results show that all the three factors have a significantly positive influence on land development intensity (β = 1.456022, p < 0.01; β = 0.004989, p < 0.01; β = 1.437964, p < 0.01). In Model 3, all five independent variables are included. The statistical results show that factors such as local economic development levels, population density, population urbanization, and land transfer revenues have positively significant influence on land development intensity (β = 0.9877823, p < 0.01; β = 0.0049814, p < 0.01; β = 1.552786, p < 0.01; β = 0.2502408, p < 0.05). Fiscal self-sufficiency rate has a negative effect on land development intensity, but it is not significant (β = −0.493482, p < 0.10). Therefore, the economic development factors such as gross domestic products (GDP), population urbanization level (UPL), population density in urban area (PDU) are the primary factors affecting urban land development intensity. To be more specific, the logarithm of per-capita GDP (lnGDP) is significant at 1% level, and its coefficient is positive. This indicates that economic development level has a significantly positive influence on land development intensity of municipal districts. With the continuous development of socioeconomic development and the improvement of national income levels, land development of municipal districts may continuously increase. The logarithm of population urbanization (lnUPR) and of population density are significant at 1% level with positive coefficients. This indicates that with the improvement of urbanization and concentrated population in cities, the increase of population urbanization rate and the increased urban population density will inevitably lead to the expansion of urban built-up land and the promotion of urban land development density. Additionally, land transfer payment revenue (LTPR) also largely drives the land development of municipal districts in cities at the prefectural or higher levels. To be specific, the logarithm of land transfer revenues (lnLTPR) is significant at 5% level, and its coefficient is positive. This indicates that increase of land transfer revenues will reinforce land development intensity. In other words, revenues such as land transfer revenues have soft budgetary constraints and can be adjusted at any time according to government expenditures. In this way, land development of municipal districts is influenced by land transfer revenues, which is also known as “land finance” proposed by Chinese scholars. Fiscal self-sufficiency rate (FSR) is not significant, indicating that the fiscal self-sufficiency rates of municipal districts are not related 114

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relatively developed areas with prominent contradiction between land supply and demand, the economic growth mode should be transferred to promote the orderly upgrading of industrial structures. Meanwhile, we should reasonably control the urbanization rate and improve land use efficiency. In western China with rapid economic development, we need to control the land development intensities of provincial capitals and reasonably develop small- and medium-sized cities. In addition, land management policies should be implemented strictly to prevent the waste of land resources. However, there remain some limitations. For example, the negative effects of the pollutants (chemical oxygen demand and ammoniac nitrogen) produced by economic activities on environment should be taken into account. Additionally, humanistic factors such as human capital are not included in this paper for the same reason, and it should be improved in future work (Fig. 6). Due to lack of data, we can’t analyze the influencing factors for urban land development from the perspective of spatial econometrics or the interaction between cities. In future studies, we will carry on a more comprehensive analysis on the influencing factors of urban land development from a microscopic perspective, such as residents' income and transport costs. This would enable us to propose more comprehensive policy recommendations. Furthermore, we will consider additional factors that influence urban land development. Thus, we will continue to undertake empirical studies under additional scenarios in an attempt to find effective solutions to deal with complex situations.

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