Dose Land Negotiation Policy Promote or Suppress Hidden Debts of Local Governments?
Abstract
:1. Introduction
2. Theoretical and Policy Background
2.1. Policy Background
2.1.1. Land Policy Practices in Different Countries
2.1.2. Land Negotiation Policy with Chinese Characteristics
2.2. Theoretical Analysis
2.2.1. Land Negotiation and Local Government Hidden Debt
2.2.2. The Transmission of Land Negotiation to Local Governments’ Hidden Debt
2.2.3. The Impact Mechanism of Land Negotiation on Local Governments’ Hidden Debt
3. Empirical Analysis
3.1. Methodology
3.1.1. Model Construction
3.1.2. Measure of Variables
- Explained variable: hidden debt of local government(debt). Presently, there are two methods used to calculate the scale of such hidden debt: direct and indirect. The direct method primarily utilizes the total sum of local financing platform debts as a representation of the hidden debt of local governments [2] (p. 19). While the indirect method calculates from the perspective of investment direction, taking advantage of the feature that the hidden debt is mainly used for municipal construction. By measuring the amount of new investment in urban infrastructure construction of local governments in each year, and deducting the funds invested in the government budget and the funds obtained from public bond issuance, the new amount of implicit debt of local governments can be obtained. Since there are some differences in the definition of local financing platforms at the national level, in documents of various caliber such as the Ministry of Finance, the (former) CBRC, the National Audit Office, the wind database and the China Bond Standard [29] (p. 40) and the relevant functions of financing platform companies have been stripped after 2014.This paper mainly refers to the method of Guan Zhihua and Fan Yuxiang [26] (p. 148) and uses the indirect method to measure the scale of local government’s implicit debt. The specific formula is as follows: scale of hidden debt of local governments = investment in urban construction fixed assets completed this year—investment in urban construction fixed assets state budget funds—bonds for urban construction fixed assets investment.
- Explanatory variable: land negotiation policy(talk). We set the dummy variable of land negotiation policy, and the value is 1 during and after the city is interviewed, otherwise the value is 0.
- Mechanism variables: land finance (Tdc), budget soft constraint (tran), fiscal decentralization (dec) and government competition(compe).
- 4.
- Control variables: Considering the influence of other factors on the scale of local government hidden debt, this paper selects the following five control variables to ensure the robustness of the results by referring to existing studies: (1) Fixed asset investment ratio (invest), expressed as the ratio of completed investment in urban construction fixed assets to GDP this year, reflects the role of fixed assets investment in promoting the scale of hidden debt; (2) Urbanization rate (urban) is expressed by the proportion of urban population in the permanent resident population of a region at the end of the year. The process of urbanization requires the investment of local government funds and material resources and, thus, becomes a major incentive for the expansion of local implicit debt [26] (p. 148); (3) Openness, measured by the amount of foreign investment actually used in the year; (4) Population(pop), total population at the end of the year; (5) Economic development level (GDP), measured by regional gross domestic product. To pursue a certain economic growth, local governments will carry out certain debt investment and financing behaviors, thus promoting the increase of the scale of implicit debt [32].
3.1.3. Data Source
3.2. Analysis of Empirical Results
3.2.1. Parallel Trend Test
3.2.2. The Overall Impact of Land Negotiations on the Government Implicit Debt
3.2.3. Conduction Pathway
3.2.4. Influence Mechanism
- Soft constraint of budget
- 2.
- Fiscal decentralization
- 3.
- Government competition
3.3. Robustness Test
3.3.1. Counterfactual Test
3.3.2. Placebo Test
3.3.3. Propensity Matching Score Method
3.4. Heterogeneity Analysis
3.4.1. Regional Heterogeneity
3.4.2. Urban Size Heterogeneity
3.4.3. Economic Development Level Heterogeneity
4. Conclusions and Policy Suggestions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
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Classification | Name | Specification |
---|---|---|
explained variable | debt | investment in urban construction fixed assets completed this year—investment in urban construction fixed assets state budget funds—bonds for urban construction fixed assets investment. |
explanatory variable | talk | 0 before the interview, 1 during the year and after the interview |
mechanism variables | Tdc | amount of land transfer fee |
tran | ln(general transfer payment income + special transfer payment income + restitution tax) | |
dec | 3× urban fiscal expenditure/(urban fiscal expenditure + provincial administrative fiscal expenditure + national fiscal expenditure) | |
compe | highest per capita GDP of cities in the same province/per capita GDP of cities× highest per capita GDP of the country/per capita GDP of cities/100 | |
control variables | fixinvest | investment in urban construction fixed assets completed this year investment/GDP |
urban | urban population/area permanent population at the end of the year | |
openness | amount of foreign capital actually used in that year | |
pop | total population at the end of the year | |
GDP | Regional gross domestic product |
Variables | Observations | Mean | Std | Min | Max |
---|---|---|---|---|---|
debt | 4331 | 25.37 | 69.04 | −176.52 | 1106.01 |
talk | 4331 | 0.12 | 0.32 | 0.00 | 1.00 |
Tdc | 4331 | 1.83 | 32.05 | 0.00 | 1620.18 |
tran | 4331 | −0.65 | 1.40 | −7.10 | 3.10 |
dec | 4331 | 30.78 | 53.76 | 0.32 | 1122.44 |
compe | 4331 | 0.03 | 1.83 | 0.00 | 120.40 |
fixinvest | 4331 | 0.04 | 0.04 | 0.00 | 0.49 |
urban | 4331 | 0.68 | 0.32 | 0.05 | 1.00 |
openness | 4331 | 5.96 | 12.13 | 0.00 | 140.05 |
pop | 4331 | 130.82 | 116.21 | 5.10 | 954.00 |
GDP | 4331 | 915.77 | 1848.31 | 12.22 | 26,927.00 |
(1) | (2) | |
---|---|---|
VARIABLES | Debt | Debt |
talk | 36.870 *** (2.68) | 11.536 ** (5.70) |
fixinvest | 388.775 *** (50.63) | |
urban | 14.60 ** (6.55) | |
openness | 1.518 ** (0.74) | |
pop | 0.057 (0.15) | |
GDP | 0.020 *** (0.01) | |
Constant | 20.190 *** (3.02) | −35.226 *** (16.75) |
time fix effect | no control | control |
individual fix effect | no control | control |
Observations | 4331 | 4331 |
R-squared | 0.055 | 0.456 |
Number of id | 275 | 275 |
Path | Talk→Debt | Tdc→Debt | Talk→Tdc→Debt |
---|---|---|---|
VARIABLES | (3) | (4) | (5) |
debt | Tdc | debt | |
talk | 20.839 *** (2.13) | 3.934 *** (1.42) | 20.103 *** (2.26) |
Tdc | 0.187 *** (0.02) | ||
Indirect effect | 0.736 *** (0.28) | ||
controls | control | control | control |
(6) | (7) | (8) | |
---|---|---|---|
VARIABLES | Debt | Debt | Debt |
talk | 19.970 ** (9.24) | 8.489 ** (4.21) | 11.500 ** (5.71) |
c_tran talk | −10.490 ** (5.33) | ||
c_dec talk | 5242.000 ** (2250.00) | ||
c_ talk | −0.947 *** (0.26) | ||
tran | −2.984 (3.13) | ||
dec | 28.010 (455.90) | ||
Constant | −39.030 *** (14.32) | −34.390 ** (15.24) | −35.210 ** (16.75) |
controls | control | control | control |
time fix effect | control | control | control |
individual fix effect | control | control | control |
Observations | 4331 | 4331 | 4331 |
R-squared | 0.459 | 0.490 | 0.456 |
Number of id | 275 | 275 | 275 |
(9) | (10) | |
---|---|---|
VARIABLES | Debt | Debt |
talkpre2 | 5.487 (3.87) | |
talkpre4 | 3.207 (2.97) | |
Constant | −35.020 ** (17.00) | −35.020 ** (16.92) |
controls | control | control |
time fix effect | control | control |
individual fix effect | control | control |
Observations | 4331 | 4331 |
R-squared | 0.453 | 0.454 |
Number of id | 275 | 275 |
Reference Regression | Conduction Pathway | ||||
---|---|---|---|---|---|
VARIABLES | (11) Debt | (12) Debt | (13) Debt | (14) Tdc | (15) Debt |
talk | 35.82 *** (2.788) | 11.15 ** (5.461) | 20.617 *** (2.20) | 4.031 *** (1.47) | 19.866 *** (2.18) |
Tdc | 0.186 *** (0.02) | ||||
Constant | 20.91 *** (3.134) | −35.93 * (18.58) | −36.211 *** (2.32) | −1.061 (1.55) | −36.013 *** (2.31) |
controls | control | control | control | control | control |
time fix effect | no control | control | control | control | control |
individual fix effect | no control | control | control | control | control |
Observations | 4062 | 4062 | 4062 | 4062 | 4062 |
R-squared | 0.054 | 0.448 | 0.614 | 0.028 | 0.621 |
Number of id | 275 | 275 | 275 | 275 | 275 |
Influence Mechanism | |||
---|---|---|---|
VARIABLES | (16) Debt | (17) Debt | (18) Debt |
talk | 18.930 ** (8.92) | 8.362 ** (4.16) | 11.120 ** (5.47) |
c_tranxtalk1 | −9.672 * (5.20) | ||
c_decxtalk1 | 5034.000 ** (2170.00) | ||
c_compextalk1 | −0.736 *** (0.26) | ||
Constant | −39.080 ** (15.95) | −35.350 ** (16.87) | −35.910 * (18.59) |
controls | control | control | control |
time fix effect | control | control | control |
individual fix effect | control | control | control |
Observations | 4062 | 4062 | 4062 |
R-squared | 0.451 | 0.480 | 0.448 |
Number of id | 275 | 275 | 275 |
Region | Urban Size | Economic Development Level | |||||
---|---|---|---|---|---|---|---|
VARIABLES | (19) East | (20) Center | (21) West | (22) Small | (23) Large | (24) Low | (25) High |
talk | 9.732 ** (4.35) | −6.780 ** (3.13) | 1.138 (3.27) | 1.198 (0.98) | 26.225 *** (6.00) | 0.945 (0.78) | 34.496 *** (7.74) |
Constant | −58.075 *** (8.95) | 29.860 *** (6.21) | −29.773 *** (7.47) | −4.687 *** (1.05) | −88.256 *** (14.29) | −13.461 *** (1.62) | −135.392 *** (17.83) |
time fix effect | control | control | control | control | control | control | control |
individual fix effect | control | control | control | control | control | control | control |
Observations | 1559 | 1617 | 1155 | 2924 | 1407 | 3301 | 1030 |
R-squared | 0.615 | 0.562 | 0.828 | 0.504 | 0.615 | 0.477 | 0.659 |
Number of id | 95 | 98 | 82 | 189 | 86 | 212 | 63 |
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Zhao, Y.; Xu, J.; Feng, C.; Gong, C. Dose Land Negotiation Policy Promote or Suppress Hidden Debts of Local Governments? Land 2023, 12, 985. https://doi.org/10.3390/land12050985
Zhao Y, Xu J, Feng C, Gong C. Dose Land Negotiation Policy Promote or Suppress Hidden Debts of Local Governments? Land. 2023; 12(5):985. https://doi.org/10.3390/land12050985
Chicago/Turabian StyleZhao, Yinglan, Jingwen Xu, Chen Feng, and Chi Gong. 2023. "Dose Land Negotiation Policy Promote or Suppress Hidden Debts of Local Governments?" Land 12, no. 5: 985. https://doi.org/10.3390/land12050985
APA StyleZhao, Y., Xu, J., Feng, C., & Gong, C. (2023). Dose Land Negotiation Policy Promote or Suppress Hidden Debts of Local Governments? Land, 12(5), 985. https://doi.org/10.3390/land12050985