Land use regulation and the anti-corruption campaign in China

Abstract

This thesis consists of two studies on the land use regulations in China. The first chapter, by way of background, offers a general introduction to the concept of floor area ratio (“FAR”), and briefly discusses the relationships between FAR and the planning management system, and between the land circulation mode and the real estate market. At the same time, it also makes a brief analysis of the development and management methods of floor area ratio. The content of this chapter consists of my own practical experience and the collective study of relevant literature, which forms the basis of the discussion in the second chapter of this thesis. The second chapter contributes to the literature by taking into consideration the fact that land developers may lobby the government for revision of the FAR limit in China. By constructing an illustrative model, we show that where revision of FAR is possible, the stringency of land use regulation may be greater when the cost of lobbying is higher or when the price per unit of floor area is lower. By utilizing the exogenous variation in the cost of FAR revision from central inspection in China, we find empirical evidence supporting our hypotheses. We find that central inspection leads to greater land use regulation stringency. The findings are robust if we conduct spatial matching. More importantly, the effects are stronger for residential land, land granted by the bilateral agreement, and land closer to the city center. Our study shows that corruption could play an important role in land use regulation and should not be neglected when studying the stringency of land use regulation.