Land sales revenue has been a significant source of revenue for Chinese local governments since the early 2000s. Contrary to popular belief, local governments did not turn to land finance to make up for lost tax revenues after the 1994 tax sharing reform. Rather, local officials sold land cheaply in return for bribes. Throughout the 1990s, local government land sales practices were driven by state agents acting on their own personal interests rather than the institutional interests of local governments. Local governments only began to sell land at high prices when forced to do so by the central government in the early 2000s as part of an anti-corruption campaign. China’s land-centric model of government finance and economic growth, so often derided for its corruption, is itself the product of an anti-corruption campaign.
Saul Wilson is a postdoctoral fellow at the Watson Institute for International & Public Affairs. He studies the politics of urban development and land property rights during China’s rapid urbanization, focusing on the Chinese state’s efforts to establish itself as a monopolist “landlord state.” His broader research agenda explores municipal politics in China, seeking to understand how leadership and institutions have shaped local politics.