The Formation Mechanism Of Land Finance And Its Solutions

In recent years, the land financial phenomenon in China has become one of the hottest topics. On one hand, the rapid development of the land finance provides an effective way for the local government to solve the funding gap and makes some contributions to accelerating the economy and social infrastructure. On the other hand, it also brings huge risk to local fiscal and financial, which affects the healthy development of social economy. So far, scholars in our country have done a lot of research on land finance and have made lots of achievements. However, the current research literature on the land finance is still lack of systematic and integrity analysis on its formation mechanism. Its understanding of the influence of land finance is not deep enough and the research on its solutions is not perfect, too.Therefore, this paper starts from defining the two aspects of land finance which are income and outcome respectively and its range as well as identifying the target which this paper analyzes. Then it describes the specific forms of this country’s land finance system and how it makes difference on the country’s economic development along with the reasons that caused unsustainability of this system. Moreover, it focuses on the influences of tax-sharing system on local land finance, discusses the shortcomings of current land expropriation and compensation policies and how the ongoing performance evaluation system affects government behaviors to get a conclusion on the governmental financing mode through releasing land mortgage loan henceforth generalizes how the land finance system works. At last, this paper raises several possible solutions to current land finance system based on all the analysis conducted above and precedent experiences drew abroad and domestically along with relevant policy proposals.