Will Rural Collective-Owned Commercial Construction Land Marketization Impact Local Governments’ Interest Distribution? Evidence from Mainland China

Abstract

To promote the harmonious human-land relationships and increased urban-rural interaction, rural collective-owned commercial construction land (RCOCCL) marketization reform in some pilot areas was a new attempt by the Chinese Central Government in 2015. In this areas, a novel interest distribution system was established with the land right adjustment and the corresponding local governments were likely to benefit through taxation and land appreciation adjustment fund. This study proposed the hypothesis that the RCOCCL marketization reform would improve local government revenue, and explored the actual effect based on panel census data of county-level administrative units from 2010 to 2018. We applied the difference-in-difference (DID) method to analyze the causal effect of this reform on fiscal revenue with 29 pilot areas selected as the treatment group and 1602 county-level units as the control group. The empirical results of the optimized DID robustness test models and the Heckman two-step method showed that the RCOCCL marketization reform does not have a significant impact because of lower land circulation efficiency, the transfer of land transaction costs, and the policy implementation deviations. Thus, weakening the administrative intervention of local governments in the RCOCCL marketization is essential to the land market development in China.