chapter  4
26 Pages

Land markets in the making

A dual land market and land rent seeking
WithJieming Zhu

The two new local agents of the local developmental state and danwei-enterprises have developed an informal local growth coalition, and land rent derived from the dual land market is used for strengthening local government-enterprise coalitions and by the local developmental state as instrument for intervention. The implicit intentions in the hidden agenda are to retain land-related benefits in the locality and for the mayors to use underpriced land as a tool to implement what can enhance their political careers. Socialist redistribution between profit-making and loss-making state-owned enterprises, coordinated by the remnants of planning control, remains effective to a certain extent. Gradualism is meant as an instrument to legitimize rather than undermine the existing political system. Commoditization and marketization of land and buildings since 1988 have initiated the process of creating market mechanisms for urban physical development. Environmental quality soon declined because of a lack of open spaces and amenities.