Value Capture Beyond Public Land Leasing

The globally wide research community has limited knowledge of China’s value capture practices beyond the straightforward public land leasing practice. This research is built on a set of case studies of how China’s city governments use indirect land sector revenue to fund urban transit projects and urban redevelopment projects in Pearl River Delta. The methods used in our case studies include semi-structured interviews and participant observation. Our findings are that value capture tools in China have been stimulated by city governments’ efforts to fund the ever-growing needs for municipal projects and services. The general and major value capture mechanism is predicated on China’s public (national) land ownership system. But the rising level of living demands for a broader range of service has led city governments to innovate with more value capture tools. These tools enable better matching of the funding needs of specific projects with the increment in land value arising from these projects. The issues relevant to central government leadership and the bottom-up city initiatives for value capture leads to variation of the same value capture tool across different cities. It thus leaves significant space for institutional innovation, effectiveness improvement, and a variety of expectation on private sector participation.

Working paper was initially posted on August 10, 2020. Minor edits were made to the paper on August 25, 2020.