CCCI: The Challenges of Municipal Finance in China

The Cornell Contemporary China Initiative Lecture Series, featuring interdisciplinary talks by scholars on issues in China today, runs every Monday this semester. This talk will be presented by Zhi Liu, Director of the China Program, Lincoln Institute of Land Policy; Director, Peking University - Lincoln Institute Center for Urban Development and Land Policy (Beijing)

This presentation will give an overview of the current challenges of municipal finance facing the Chinese cities and explores the ways out. Over the last two decades, Chinese cities have relied heavily on land-based financing to fund urban infrastructure development. The financing mechanism helped cities expand and upgrade quickly to accommodate rapid urbanization. On the other hand, it also created wrong incentives that led to a number of urban problems such as growing local debts, inefficient land use, escalating housing prices, and increasing social tension between the urban governments and farmers. The new round of economic reform which was initiated in late 2013 attempted to reduce the scope of land-based financing, but its implementation has resulted in the reduction of municipal revenues from land concessions. As a result, the cities are facing a major municipal fiscal challenge. This presentation will review the practices of land-based financing for urban infrastructure development, and discuss their consequences. Futhermore, the talk will discuss the implications of the new round of economic reform on municipal finance. Finally, the talk will explore the prospects of municipal finance reforms, alternative sources of municipal revenues, and the necessary changes of urban governance.

Co-sponsored by City & Regional Planning.