Collective Land and Industrial Development in Shenzhen: Current Status and Future Prospects

Industrial development contributes significantly to China's economic growth in the past three decades. As one of the most fundamental institutional arrangements, the urban-rural dual land system plays an important role in China's industrialization process and hence economic growth. Property rights theory suggests that property rights have significant effects on economic performance. In the context of industrial development in China, it implies that different land property rights structure may have different economic effects on industrial development. This study, which is based on available literature, statistical data, a range of unpublished primary sources and the author's own experience, examined the economic implications of collective land property rights on industrial development. Emphasis is put on efficiency of industrial land use. Shenzhen is selected as the case study. An analysis of available data suggests that majority of whole industrial output of Shenzhen comes from industrial development on collective land in recent years. Incomplete collective land property rights structure causes the inefficiency of industrial land use in terms of lower Industrial output value and lower development ratio when compared to complete state-owned urban land system. Two main reasons why collective land leads to inefficiency of industrial land use are identified as follows: collective land has no access to legal land market and credit market; collective land is not included in the land management system, thus cannot be guided and controlled effectively by urban development strategies and policies. The study concludes with an assessment of the recent land policy reforms and a discussion of some likely future changes.