Industrial land price and its impact on urban growth : a Chinese case study

Wu, Yuzhe, Zhang, Xiaoling, Skitmore, Martin, Song, Yan, & Hui, Eddie C.M. (2014) Industrial land price and its impact on urban growth : a Chinese case study. Land Use Policy, 36, pp. 199-209.

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Abstract

China is experiencing rapid progress in industrialization, with its own rationale toward industrial land development based on a deliberate change from an extensive to intensive form of urban land use. One result has been concerted attempts by local government to attract foreign investment by a low industrial land price strategy, which has resulted in a disproportionally large amount of industrial land within the total urban land use structure at the expense of the urban sprawl of many cities. This paper first examines “Comparable Benchmark Price as Residential land use” (CBPR) as the theoretical basis of the low industrial land price phenomenon. Empirical findings are presented from a case study based on data from Jinyun County, China. These data are analyzed to reveal the rationale of industrial land price from 2000 to 2010 concerning the CBPR model. We then explore the causes of low industrial land prices in the form of a “Centipede Game Model”, involving two neighborhood regions as “major players” to make a set of moves (or strategies). When one of the players unilaterally reduces the land price to attract investment with the aim to maximize profits arising from the revenues generated from foreign investment and land premiums, a two-player price war begins in the form of a dynamic game, the effect of which is to produce a downward spiral of prices. In this context, the paradox of maximizing profits for each of the two players are not accomplished due to the inter-regional competition of attracted investment leading to a lose-lose situation for both sides’ in competing for land premium revenues. A short-term solution to the problem is offered involving the establishment of inter-regional cooperative partnerships. For the longer term, however, a comprehensive reform of the local financial system, more adroit regional planning and an improved means of evaluating government performance is needed to ensure the government's role in securing pubic goods is not abandoned in favor of one solely concerned with revenue generation.

Impact and interest:

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12 citations in Web of Science®

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ID Code: 62723
Item Type: Journal Article
Refereed: Yes
Keywords: Land use, Industrial and price, Urban growth, Centipede game model, China
DOI: 10.1016/j.landusepol.2013.08.015
ISSN: 0264-8377
Divisions: Current > Schools > School of Civil Engineering & Built Environment
Current > QUT Faculties and Divisions > Science & Engineering Faculty
Copyright Owner: Copyright 2013 Elsevier Ltd.
Copyright Statement: This is the author’s version of a work that was accepted for publication in Land Use Policy. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Land Use Policy, [VOL 36, (2014)] DOI: 10.1016/j.landusepol.2013.08.015
Deposited On: 23 Sep 2013 01:51
Last Modified: 18 Jul 2015 19:30

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