The impact of China's dual land supply strategy on urban economic growth: a sectoral analysis

Over the past two decades, China's Dual Land Supply Strategy, widely implemented by local governments, has significantly reshaped urban industrial structures and contributed to the country's rapid economic development. Despite its widespread implementation, the sector-specific effects of this strategy on urban economic growth have not been comprehensively studied. This paper fills this gap by examining the impact of the Dual Land Supply Strategy on urban economic growth across the primary, secondary, and tertiary sectors, using panel data from prefecture-level cities between 2005 and 2019 and a two-way fixed effects model. The findings reveal that the strategy promotes economic growth primarily through the expansion of factor inputs, such as investment and labor, rather than improvements in production efficiency. Specifically, it reallocates resources from the primary sector, improving its productivity, while substantially boosting the secondary sector through increased investment and labor inflows. Nonetheless, this leads to reduced productive efficiency within the secondary sector due to over-concentration and inefficient resource utilization. The strategy also raises development costs in the tertiary sector, limiting resource allocation and creating a lock-in effect in the secondary sector, hindering the transition towards a service-oriented economy. These findings highlight the sectoral heterogeneity of the strategy's impact, underscoring the need for more targeted land policies. A gradual relaxation of land-use regulations is recommended to support balanced and sustainable growth. This research offers new insights into how land supply strategies affect urban economic growth and sectoral development, providing a foundation for future studies and policy recommendations.