Huang Dingxi

Introduction International experience and practices Development of land banking in China Case study in Guangzhou, China Conclusions

• Land banking is a mechanism initiated in western countries with over 100 years of history.

– Amsterdam, the Netherlands, since 1896– Stockholm, Sweden since 1904– Canada since 1950’s– France since 1958– Pilot projects in U.S. since 1970’s

The acquisition of land ahead of development either by construction companies or by central or local government or their agencies. (Evans 2004)

Public or publicly authorized acquisition of land to be held for future use to implement public land policies. (Strong 1979)

Different categories of land banking◦ Land banking by public sector◦ Land banking by private companies

Related terms◦ Land bank◦ Land assembly

Correspondent term in Chinese◦土地儲備 （ tu di chu bei ）

1 Acquisition 2 Holding 3 Disposition

From:Mostly private lands Either built up or open space areaProved as public interestThrough:Friendly negotiationOr Compulsory purchase

From:Rural collectively owned land Former state -owned enterprises Overdue vacuum sitesThrough:Compensation or no compensation

For: Various Periods

Status:PreservationOr Temporary use

For:Various Periods

Status:Temporary UseOr Infra structure Construction

Lease to affordable housingOr Sale to local governmentsOr Sale at market priceOr Sale at subsidized price

Public Sale of LUR at market price

Western Mechanism

Chinese Mechanism

The power and responsibility for implementing land banking mechanism in western countries were usually taken by two types of entities:◦ Special committees ◦ Municipal/county/state owned corporations

The power, source of finance and goals of these entities were strictly defined by local or national legislation. (Zhang and Wang 2003)

Each land banking project in Europe or America usually had an explicit major objective. ◦ Provision of affordable housing: Sweden◦ Control urban growth pattern: Netherlands,

France◦ Control land price: Canada, Australia

Institution framework for implementation of land banking were built to facilitate the achievement of the major objective. (Strong 1979)

As a mechanism of public intervention in the land development process, land banking affects city development in several aspects beyond the initiate major objective.

Flenchner (1974) summarized the effects of land banking practice in western countries as:

Control on urban growth pattern Capturing capital gains for public finance Land price regulation

In central Europe, to solve the problem of fragmentation of agricultural lands.

In Africa, as a way to control social tensions arising from imbalanced distribution of resources, local overpopulation, unemployment and involuntary displacement in the past. (VanDijk & Kopeva 2006)

Constitution Amendment◦ Article 10:Clarification of state land

ownership in urban area

Economic reform in cities began & Pilot trials of urban land market ◦ Land-use fee and arable land

occupation fee Land Administration Law

1982

1984

1986

First open land use right auction in Shenzhen

Land Administration Law Amendment◦ Approval of urban land use

right (LUR) transaction◦ Dual-track urban LUR market

Land Administration Law Amendment & Establishment of MLR[1]

◦ Overall land use plan

1987

1988

199219961998

LDC@GZ[2]

LBC@SH[3]

[1]MLR=Ministry of Land and Resources[2]LDC= Land Development Center[3]LBC= Land Banking Center

During the early period of LUR market (in the 1990’s), LUR were traded under a dual-track market: ◦ Co-existence of market supplied land with

administratively allocated land◦ Great difference in LUR prices◦ Existence of an uncontrolled black market

Land value gains were flowing to powerful companies or individuals rather than the government.(Xie 2002)

Guangzhou Land Development Center- established in 1992 to facilitate comprehensive development of new city center via land banking mechanism.

Establishment of Shanghai Land Banking Center in 1996- recognized as the 1st city land banking authority in China in most Chinese literature.

(Source: Yang et al 2005)

Direct Top- Down promoting forces

◦ Minister of Land and Resources highly praised Hangzhou’s land banking experience at a conference of mayors in 1999. (Zhou, 1999)

◦ In 2001, State Council’s Announcement for strengthening state owned assets management (Document No.15-2001) recommended “cities with suitable conditions” can implement land banking to “strengthen the ability to adjust the land market”.(State Council,2001)

Central Government’s effort to establish a single-track LUR market◦ Announcing LUR to use all kinds of land for business

use (residential, commercial and tourism ) and industrial use must be sold publicly by bidding, auction and public announcement in since 2002 and 2007 respectively. (MLR, 2002,2007)

City governments are becoming economic interest group preoccupied with local growth in the process of decentralization during economic reform in China. (Zhu 2004; Xu and Yeh 2005)

Introduction of different practices. Proposals or solutions for the problems

arousing with the implementation of public land banking.◦ Quantity and location of land for banking◦ Finance◦ Risk management◦ Institutional structure and legislation

What are land banking mechanism’s possible effects on city development in China?

How to define explicit objectives of implementing the land banking mechanism?

The similar mechanism as the western practices may lead to similar effects on:◦ Land price ◦ Revenue of city governments◦ Urban growth pattern

Under the rapid development context of China, land banking may also influence the process of socio-spatial restructuring:◦ Re-distribution of residential areas of different social

classes◦ Speedy urbanization of the former rural areas affected

by land banking◦ Upgrade of industrial sector when industrial land is no

longer free of charge

Guangzhou land development center established in 1992 under the Guangzhou Land and Resource Bureau.

Authorized by the municipal government to implement land resumption, acquisition, land banking, and LUR sales

Source of land bank◦ Resuming state-owned land when the LUR owner

Delays development for an overdue period Or no longer exists

◦ Purchase of urban LUR◦ Acquisition of collectively-owned rural farm land

By the end of 2004, the GZLDC was holding a land bank of 2854.96 hectares.

Spatial Distribution of GZLDC’s land bank at Dec 2004 (source: provided by GDLDC through interview)

Key development areas of Guangzhou at the period of 2006-2010

(Source: Short-term development plan of Guangzhou from 2006 to 2010)

Source: Generated from public database of website of Guangzhou Land and Housing Bureau(www.laho.gov.cn)

Source: Generated from public database of website of Guangzhou Land and Housing Bureau(www.laho.gov.cn)

Price of LUR Sale from Land Bank of Guangzhou (2002-2006)

Comparison of land bank income, city fiscal income and infra structure investment of Guangzhou in 2002-2006Source: Generated from public database of website of Guangzhou Land and

Housing Bureau(www.laho.gov.cn)

(Photo sources: maps.googel.com ,www.xkb.com.cn)

Area A: 11 ha, Resumed by city land bank, and soon sold by auction at RMB 4.6 billion with 562830 m2 of floor area.

Area B: Hotel development with villagers as share holderArea C: High rise flats to compensate the villagers at 1 for 1 floor area ratio. Both area B and C are built on income from area A. (Picture source: www.upo.cn)

Simplified replication of a mechanism due to scarcity of suitable institutions.

◦ Creating a suitable institutional framework for the newly emerging LUR market in China is difficult. However the replication of the land banking mechanism from other cities are of little cost.

Administration-oriented operation at city government level◦ Administrative document at national level was not

published until Nov 2007.◦ Operation is regulated under administrative

documents published by city governments.

Focusing on land development process rather than the balanced objectives of city development◦ Promoted and implemented by the land

administration system of governments.◦ Income form LUR sales as direct incentive.

Your comments are welcome!

Please contact: dxhuang@hkusua.hku.hk