The strong complementarity between the Lincoln Institute’s expertise and China’s land policy challenges provided the rationale for the Lincoln Institute’s activities in the People’s Republic of China. China’s rapid economic growth over the past 35 years involved the usual structural changes in the economy (a declining share of agriculture; an expanding share of manufacturing and services; growing trade; and increasing urbanization), but it has also involved an institutional transformation, as the centrally planned economy moved pragmatically to a greater reliance on market mechanisms. This institutional change has been especially challenging in the case of land, because of the dual land tenure system whereby land is owned either by the state or collectively. China’s growth has produced many land-related problems ranging from property rights and urban growth, to property taxation and municipal finance reform, to land conservation and housing affordability. The Lincoln Institute’s extensive international experience with these issues and China’s impressive track record in using international expertise to inform its policy implementation led us in the early 2000s to believe that cooperation between the Lincoln Institute and China had great potential.

Lincoln Institute’s activities in the People’s Republic of China were initiated in 2001, and its China Program was formally established on July 1, 2003. Activities were originally carried out by staff and consultants based in the United States who travelled to China. Professors Chengri Ding and Gerrit Knaap of the University of Maryland were heavily involved in the China Program’s beginnings. These early years saw the initiation of training programs, sponsorship of research with government agencies, support of research fellowships, and the organization of research conferences and policy symposia. Early areas of focus were property taxation, farmland preservation, and urban planning. The idea of creating a center in partnership with a Chinese university soon emerged as the travel and logistical challenges of managing the program from abroad became evident. In addition, the Lincoln Institute’s change in status from an educational institution to a private operating foundation in 2006 required greater programmatic involvement of its own staff in all of its activities.

Preliminary discussions to explore a partnership with Peking University began in 2005 and continued through 2006, culminating in a formal agreement to establish the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC) on October 9, 2007—one decade ago. On the university side, this process was overseen by the then-executive vice president of Peking University, Professor Lin Jianhua, who skillfully facilitated the establishment of the PLC. It provides support for education, training, and research in urban economics, urban policy, land management, land policy, property taxation, local government finance, urban and regional planning, and urban affairs. Its mission has been to study land, urban, and fiscal policies; to disseminate results from its studies and research; and to facilitate education, training, policy analysis, and research involving scholars, policy makers, and practitioners. In mid-2007, Joyce Man was appointed director of Lincoln Institute’s Program on the People’s Republic of China and became the founding director of the PLC. In late 2007, office space at Peking University was quickly prepared and local staff hired under her direction, enabling the PLC literally to open its doors in January 2008. Its establishment was memorialized in an inauguration ceremony on April 21, 2008 with featured speakers Arnold C. Harberger, distinguished professor at UCLA, and Gang Yi, vice president of the People’s Bank of China.

From its beginning, the PLC annually offered several specialized training courses for government officials on topics proposed by government departments. Involved government agencies have included State Administration and Taxation, Ministry of Land and Resources, Ministry of Finance, Ministry of Housing and Urban-Rural Development, and the Ministry of Transportation. Topics have ranged from real estate appraisal techniques and property tax administration, to transit-oriented development and affordable housing. In addition, the PLC has arranged many symposia attended by international experts and government officials to review international experience in particular public policy areas. Topics have included local public finance, property rights, urban transport, housing markets, and urban planning. Participating agencies, in addition to those just mentioned, include the Development Research Center of the State Council and the National Development and Reform Commission. Chinese officials have proved to be skillful at drawing on good practices from international experience and incorporating them in new policies adapted to the special conditions in China.

The Lincoln Institute has a long track record of providing education and training on land related issues directly to academics and practitioners. Given the scale of China, the PLC shifted audience to focus on those who train others. This approach, called Training the Trainers, aims to enhance the capacity and awareness of young scholars throughout China to address issues related to urban development and land policy. This annual PLC program targets assistant and associate university professors and professional researchers. It increases competence through intensive professional seminars. The one- to two-week sessions are generally attended by about 60 participants, the majority of whom have doctorate degrees and a high level of English proficiency. Instructors are leading international experts who offer participants an invaluable international perspective. The sessions have normally taken place in Beijing, but in recent years the sessions have also been offered by video conference to include participants in other locations. Since the PLC’s founding, nearly 600 scholars have benefitted from this training program.

In addition to training and education, the PLC has supported land-related research in a variety of ways. Using an open call for proposals and expert panels to review submissions, the PLC has annually granted about 10 dissertation fellowships to support the research of Ph.D. students in China and seven research fellowships to senior researchers in China. Similarly, the PLC has granted about three international research fellowships annually to scholars outside of China. All of these fellowship recipients have gathered to discuss their draft reports at an annual research conference in China, whose attendees include international experts and notable Chinese scholars of land policy. An overall objective of the training and research program has been to create a community of scholars knowledgeable about land-related policy issues and the state of current research on such topics, and these in-person conferences, training sessions, and symposia have contributed mightily to this objective.

Staff and faculty of the PLC have also carried out research on urban and land issues, and three contributions deserve special mention. First, in 2010 PLC staff realized that municipal indebtedness was growing and poorly understood. Many municipalities had created local government financing vehicles that used urban land as collateral to borrow funds from banks. This debt was not included in local government accounts. The PLC produced some of the first estimates of the surprising size of this indebtedness, and subsequent work by the National Audit Office confirmed the magnitudes. Second, although it was widely recognized that housing prices in China’s major cities had been rapidly rising, available housing price indices understated the increase. The PLC worked jointly with Professor Siqi Zheng, then of Tsinghua University, to develop a new housing price index based on the repeat sales method used in the Case-Shiller housing price index for the United States. Launched in 2014, this China Quality-Controlled Urban Housing Price Index is recognized as the most accurate index currently available. Third, Professor Canfei He, Associate Director of the PLC, has over the past several years produced a body of empirically based research on the economic geography of China’s cities, including how the restructuring of China’s export-oriented industries is affecting patterns of urban growth. His work has improved understanding of the determinants of urban growth across China’s provinces.

The PLC has done a very credible job in meeting its original objectives and it has proven to be a sustainable institution enduring through the many changes in China and the world that have occurred since its founding. One reason for its success is that the PLC is not the Lincoln Institute’s “office in Beijing” but was conceived of and operated as a true joint center between Peking University and the Lincoln Institute. Another reason is that it has been skillfully led, originally by Joyce Man and now by Zhi Liu. In addition, land-related issues in China have proven to be extremely challenging, not amenable to simple and quick solutions, and often linked to other policy issues. Accordingly, revenue from land—whether from conversion of rural to urban use or from land-based taxes—is inexorably linked to local fiscal health, and land conversion from rural to urban use is a key determinant of the location and speed of urban growth. My hope when the PLC was established was that it would work itself out of a job by helping Chinese policy makers resolve many land-related issues or at least dramatically reduce their salience. This hope has proven elusive, and it appears that the PLC still has much work to do.

On October 14, we will celebrate the 10th anniversary of the Peking University–Lincoln Institute Center for Urban Development and Land Policy, more affectionately known as the PKU–Lincoln Center, or PLC. To commemorate the occasion, we are dedicating this issue of Land Lines to illustrate some of the PLC’s land policy work in contemporary China. While it is impossible to cover the broad set of activities and issues addressed by the PLC, we hope that the stories presented here will represent the relevance and rigor of our work. Since its founding, the PLC has both observed and participated in land policy formation in China. In this message, I will reflect on the future of the PLC in light of our experiences over the last decade and the current trends we’ve observed. In addition, we’ve asked Lincoln Institute President Emeritus Gregory K. Ingram to provide a retrospective reflection on the Lincoln Institute’s program in China. Dr. Ingram and Peking University President Lin Jianhua were the PLC’s principal architects, bringing the center to fruition in October 2007. 

It is hard to imagine a more extraordinary decade in China’s remarkable economic history than the last one. Ten years ago, China’s annual GDP growth was 14.2 percent, a near-peak in the post-reform era, culminating a 25-year run of double-digit average increases in real GDP. This growth rate, more than double that of global GDP, propelled the nation’s global economic stature so that China now challenges the United States for worldwide economic dominance. 

Importantly, this growth was fueled by land. Huge infrastructure investments facilitated industrial expansion around major cities, which grew by leaps and bounds using land-based financing. China now has more than 100 cities with over 1 million residents and some 15 “megacities” or urban agglomerations with populations over 10 million. In 2007, only Shanghai and Beijing were home to this many people, according to the United Nations Department of Economic and Social Affairs.  

During the decade, the economy lost some momentum, and policy makers adjusted to a “new normal” of roughly 7 percent annual real GDP growth—but this is still twice the rate of global GDP growth, positioning China to double the size of its economy in the next decade. The dizzying performance of the last few decades drove major population migrations from rural to urban areas. When the PLC launched in 2007, China was urbanizing at an unprecedented pace, adding more than 20 million urban residents annually. In 2007, 45 percent of China’s population was urban, up from 20 percent in 1980. Today, the population is 57 percent urban and is expected to reach 60 percent by 2020. A significant share of new urban growth occurred in the increasing number of megacities such as Beijing, Shanghai, and Shenzhen.

China’s unprecedented growth and mass urban migration generated both intended and unintended consequences. For example, the rapid expansion of megacities is beginning to level off. Many young professionals have begun gravitating toward second- and third-tier cities instead. When surveyed, recent migrants indicated four main reasons for their moves: high housing costs in megacities, stress from the frenetic pace of life, difficulty managing the care of aging parents, and air pollution. Over the next decade, the PLC will observe and track this trend to determine the implications for land and housing policies in both the megacities and the second- and third-tier cities that are receiving new migrants. 

The housing market, a significant tailwind for economic development over the last decade, has become a major impediment to growth in recent years. China’s fast-rising house prices are an artifact of widespread speculation by a fast-growing middle class looking for good yields on long-term investments. In past years, this investment was encouraged by the national government, which recognized that property development would significantly drive up GDP. However, increasing shortages of affordable housing are now becoming a big problem in many cities, locking out first-time home buyers. This trend has been accompanied by a decline in land-based financing for municipalities as land reforms have curtailed the practice. Recently, the central government signaled a new policy direction when President Xi Jinping stated that “Houses are built for living, not for speculation.” At the same time, lenders have begun rationing credit to cool housing demand. The PLC will continue to track the housing sector to see whether it can help craft a “soft landing” for it. 

Urbanization in China, as in other countries, was accompanied by a dramatic decline in poverty as well as increased inequality in the early years. But in this regard, China departed from some international patterns: Although inequality, as measured by the Gini coefficient, rose steadily from the 1980s until 2010, it has been declining since 2012. We expect that this is not the only way that China’s transformation will break from common development patterns. The habit of breaking from common, historic development patterns is testament to China’s ability to study and learn from the experiences of other countries, a process in which the PLC has played a role.

In the last decade, the PLC contributed to policy debates by nimbly and quickly mobilizing international experts connected to global Lincoln Institute networks. In the coming decade, we expect to respond similarly to requests for high-level international exchange from government and institutional counterparts including the Budget Affairs Commission of the National People’s Congress, Ministry of Finance, the Ministry of Land and Resources, Ministry of Housing and Urban and Rural Development, State Administration of Taxation, Development Research Center of the State Council, China Center for International Economic Exchange, and China Land Survey and Planning Institute in topical areas such as property taxation, municipal finance, land policy, housing policy, and land conservation.

A hallmark contribution of the PLC over the last decade has been knowledge dissemination and policy advice on the property tax law, property value assessment, and local tax administration. While the National Property Tax Law is not on the legislative timetable this year, there is mounting political pressure to introduce a property tax. We expect that the approval of the national property tax law will generate future demand for technical support to implement the new tax, particularly in smaller cities, especially for property value assessment and municipal administrative systems. The PLC will promote research to lighten administrative burdens on municipal governments by studying, for example, how combining drone technology and property registration data can quickly establish cadastral systems for cities with weak technical capacity. The PLC also will investigate the applicability of other land value capture instruments, such as negotiable developer obligations, as another way to build a fiscal base for local governments.

China has encountered the limits of carbon-fueled growth and is now becoming a world leader in renewable energy generation. This orientation toward “green growth” also characterizes new government policies that emphasize qualitative aspects of economic and urban development over quantitative measures. The “sponge cities” program, for example, illustrates the national commitment to use green infrastructure to improve water management in cities. The national government will pilot the program in a select group of cities, the way it introduces many new policies, before establishing it on a national stage. The PLC will participate in the pilot city programs, studying implementation and suggesting ways to improve policy approaches before the program is deployed nationally.

The PLC has helped advance the evolution of urban land and housing policies in China through its intellectual output—through research, dissemination of knowledge, and international exchange. In ten years, the PLC built a network of hundreds of urban development and land policy experts through its flagship Training the Trainers course. The program will remain a primary way that we expand our academic and policy networks in China. Currently, our networks heavily represent senior scholars and policy makers. This has exacerbated a bias in China’s research funding system, which favors established scholars, leaving young academics with very limited funding opportunities. Recently, we decided to cultivate a pipeline of young scholars in China using our domestic research support. Following recommendations from our board of directors, we plan to hire established academics to mentor our young scholars. Beginning this year, we will bring on affiliated research advisers on a part-time basis, to supervise projects and foster higher quality research from our young scholars. In addition, we will bring young PLC fellows and graduate students or affiliated scholars to the Lincoln Institute in Cambridge to conduct research as visiting scholars and work closely with the U.S. staff. Through these efforts, we hope to replenish academic and policy networks to serve China in perpetuity.

The Lincoln Institute of Land Policy is tremendously proud of the work of the PLC. The enormous role that land and land policy have played in China’s unprecedented transformation over the last decade has fascinated, daunted, challenged, and sometimes overwhelmed us. We are honored and humbled to have the opportunity to work with Peking University and its visionary leadership. We look forward to future decades of collective efforts to find the answers to some of our most vexing social, economic, and environmental problems in land.