Abstract: This paper concerns why urban specialization does not happen commonly in contemporary China from the viewpoint of local financial system.The financial system constrains and motivates local governments' behavior.Small share of tax revenue and lack of property taxes make local governments rely on land sale revenue heavily.Yet,as recognizing occasional land sale revenue will meet limits sooner or later,local governments have been promoting industrial development for the purpose of long-term regular tax revenue instead.In the cut-throat capitalist world,subsidizing industrial development has been a common policy tool of local governments to compete for investors.Therefore,the process of turning occasional land sale revenue to regular tax revenue has affected China's urbanization in two aspects:opposite pricing in commercial and industrial land,and homogenization of industrialization.These are integral parts of China's urbanization process.Any policy proposal ignoring the integral whole system would not work out.We suggest fixing the financial system and rebuild a more comprehensive one so that local governments will change their economic behaviors,and urban specialization will be formed automatically.
Publication Year: 2009
Publication Date: 2009-01-01
Language: en
Type: article
Access and Citation
Cited By Count: 1
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot