Land Financialization, Uncoordinated Development of Population Urbanization and Land Urbanization, and Economic Growth: Evidence from China

In recent years, it has become common practice for Chinese local governments to inject land assets into financing platform companies and use them as mortgage or credit guarantees to obtain bank loans and issue urban investment bonds, which is known as "land financialization". This study investigates the impact and mechanism of land financialization on the uncoordinated development of population urbanization and land urbanization in China. Theoretical analysis and empirical analysis results based on the data of prefecture-level cities in China from 2006 to 2015 demonstrate that land financialization by local governments is a significant cause of the uncoordinated development of population urbanization and land urbanization, and the pressure of urban economic development will strengthen this negative impact. Extended analysis further reveals that in areas where population urbanization and land urbanization are uncoordinated, land financialization, while promoting urban spatial expansion, will lower land use efficiency and have an inverted U-shaped influence on economic growth due to a weak agglomeration effect. The above conclusion shows that urbanization driven by debt-based investment is unsustainable. Efforts should be made to establish a financialization system that propels sound urbanization and to build a stable input linkage between land financialization and the supply of urban public service.