Institutional analysis of land use policies in China under the transition economy : with reference to rural to urban land conversion in Guangzhou

Abstract

China is experiencing a transition economy that is driven by both the market mechanism and planned-economy mechanism. However, they are mutually incompatible mechanisms in resource allocation. The study tries to explore the effects of the land use policies on land allocation under the transition economy. Land use activities are strongly conditioned by institutions or the 'rules of the game' governing land use transactions. The study adopts an institutional approach to examine the evolution of institutional arrangements concerning land use policies in China under the transition economy. Institutional arrangements concerning land allocation are classified into three layers, i.e. the constitutional, governance and operational level for discussion. The study takes the rural-urban land conversion process in Guangzhou as a reference. The effects of land use polices on land allocation under the transition economy should be measured by the actual development outcomes. Two projects in Guangzhou city (the Pearl River New Town and the Guangzhou Science Park) are studied to explore the extent to which the development outcomes met the expectations established. The Pearl River New Town development is based on the market approach in land allocation in China, whereas the Guangzhou Science Park project is an example of projects that are largely based on traditional planned economy mechanism with some modifications to adapt to the institutional changes under the transition economy. The study reveals that there are extremely dynamic interactions between layers of the institutional arrangements concerning land use. The constitutional and governance level are changing themselves to adapt to the new situations brought about by the emerging power of market at the operation level under the transition economy in Chinese cities. As a conclusion, the land allocation mechanism in China is generally inefficient as development goals are normally formulated according to a planned economy mentality but are implemented through the market economy approach. The institutions governing the land conversion are found to be inadequate to handle the changing situation. The study identifies some institutional weaknesses (i.e. incomplete property rights, imperfect land use legislation system and uncontrolled discretionary decision-making over land) of the land allocation system under the transition economy.