Does the Differentiation of China’s Land Policy Promote Regional Economic Development?

Abstract

The land factor in China still has many distortions which are the key constraints to economic development. The government intervention in land prices is the root cause of distortions in land factor. So, how to achieve the optimization land utilize through policy guidance is one of the most important issues. Using China’s city panel data from 2010 to 2020, this study assesses the economic impacts of the inter-provincial transfer of construction land indicators by synthetic difference-in-differences method and estimates the growth effect and equilibrium development effect of the policy, respectively. The results show that first, the differentiation of the land policy will give more land indicators to the backward regions, so that the local governments can obtain more land concession opportunities; thus, a more obvious “land finance” is formed and local economic growth is promoted; second, the differentiation of the land policy fails to promote the balanced development between regions, further expanding the development differences between regions. The findings of this study not only provide countermeasure suggestions for the area in China but can also be applied to many developing countries, especially those which are rapidly developing, to help the development of poor regions through targeted fiscal transfer policies.