China's Land Finance as Active Mode of Land Development and Infrastructure Delivery (Xu, 2025)

Summary

"China's Land Finance as Active Mode of Land Development and Infrastructure Delivery: Reality, History and Prospects," by Nannan Xu, appeared in the International Journal of Urban and Regional Research 50: 191–220, published online 5 October 2025 (print January 2026). The paper's central move is a two-mode typology of land-value capture: a passive mode, which the author argues characterizes most developing countries, where private developers finance and organize urban development and capture the resulting land-value increases themselves, constrained only by weak state capacity and — often — coalitions between developers and local officials; and an active mode, in which public authorities directly organize and finance development and capture the land-value increases for public purposes. Xu's argument is that China is a significant, unusual real-world case of the active mode operating at national scale.

The Argument: China as an "Active" Georgist Case

Xu traces China's departure from the passive equilibrium to deliberate central-government policy design — specifically, land-use reforms and fiscal arrangements that gave local governments both the authority to organize land development (assembling and preparing land parcels, financing infrastructure) and a direct claim on the resulting increase in land value through land-leasing revenue ("land finance," a major share of Chinese local government revenue since the 1990s–2000s reforms). This is explicitly framed by the author as a Georgist value-capture arrangement in practice: land value is publicly created (through public infrastructure investment and development coordination) and publicly captured (through the land-leasing mechanism), rather than accruing to private developers as in the passive-mode default. The paper recommends China extend this logic further — to capture value from property reselling and redevelopment gains, not just initial leasing — and direct more land-finance revenue toward social spending, naming senior care and child benefits specifically.

Relation to the Georgist Case

This paper is a genuinely distinct contribution from the wiki's other China land-policy pages. Xu, Huang & Li's HCRS paper (different authors, note the surname coincidence with this paper's sole author) argues Deng-era rural land tenure shares a deep structure with Georgist land-value capture, but is about agricultural tenure, not urban development finance. Gaffney's real-assets model addresses China's property-driven macro-financial boom-bust cycle, not the institutional mechanics of value capture. Nannan Xu's paper fills the gap between them: it is specifically about how China's land finance system institutionally captures land value for infrastructure delivery, framed explicitly and approvingly in Georgist terms — the strongest direct engagement with Georgist value-capture theory, by name, that the wiki's China cluster currently has.

Nuances and Limits

• China's land-finance model has well-documented downsides the paper's own recommendation to extend it (rather than reform its problems) does not fully address — most notably its entanglement with local-government debt (much of it off-balance-sheet, via urban investment vehicles) and its dependence on continuously rising land values, a dependence that has come under severe strain amid China's post-2021 property-sector downturn. This page does not assess how the author's "active mode" framing engages that downturn, since the abstract does not cover it.
• "Active" vs. "passive" is the author's own typology, not a standard term in the land-value-capture literature the wiki otherwise cites (Lincoln Institute, Andelson) — worth flagging as this paper's own framing device.
• Only the abstract is publicly available; this summary rests on it. Specific case evidence, data, and the paper's treatment of land finance's debt and volatility risks are not covered by this page.

Bears On

• Concept: Land Value Capture — a national-scale, government-organized "active mode" case study, contrasted with the developer-led "passive mode" typical of most developing countries.
• Research: Xu, Huang & Li: Did Henry George Inspire China's Economic Miracle? — a separate paper on rural tenure, distinct from this paper's urban land-finance focus.
• Research: Gaffney: A Real-Assets Model of Economic Crises (China) — the macro-financial risk side of the same land-finance system this paper treats institutionally.

See Also

• Land Value Capture
• Henry George
• Liu & Zhu: Contested Rent-Based Urban Governance in China — a distinct intergovernmental-tier framing of Chinese land-rent politics, complementing this paper's state-vs-developer account
• Xu, Huang & Li: Did Henry George Inspire China's Economic Miracle?
• Gaffney: A Real-Assets Model of Economic Crises (China)
• Liu: Shanghai and Chongqing's Real Estate Tax Pilots — a different Chinese fiscal instrument (recurrent property tax) coexisting with, rather than replacing, the land-lease system this page documents
• Cho, Park & Zhang (2026) — a general-equilibrium look at who gains and loses if China adopted a recurrent property tax alongside its land-finance system

Sources

1. Nannan Xu (2025), "China's Land Finance as Active Mode of Land Development and Infrastructure Delivery: Reality, History and Prospects," International Journal of Urban and Regional Research 50: 191–220, published online 5 October 2025, DOI 10.1111/1468-2427.70024. doi.org — read at abstract level (2026-08-26); used for the active/passive land-development typology, the central-government-policy-design attribution, the land-leasing revenue mechanism, and the recommendation to extend value capture to resale/redevelopment gains and social spending (B-claim).