Political connections and allocative distortions: the land quota system in China

M.Phil.Patronage networks are pervasive in nondemocratic regimes and play important roles in distorting resource allocation. This paper studies the land quota system in China.Within this system, higher-level governments assign annual construction land quotas to regions within their jurisdictions. These quotas determine how much agricultural land can be converted into construction land and then sold by the government in each region. With strong incentives to promote economic growth, city leaders resort to their political connections to get more quotas. Using 276 cities’ data from 2007 to 2015, I find, ceteris paribus, a city sells around 12% more newly converted construction land (or receives 12% more construction land quota) when its leaders are connected to provincial leaders, and this leads to 3.6% increase in current year’s gross land revenue and 0.04 percentage points increase in GDP growth rate. This allocative distortion has a huge impact on the overall efficiency of the economy and also undermines the effectiveness of China’s ‘political meritocracy’裙帶關系常見於非民主國家中，並對扭曲資源分配有著重要影響。本文研究了中國的土地指標制度。這壹制度規定上級政府每壹年都需要給轄區內的下級政府分配新增建設用地指標。這些指標決定了在每個地區，有多少農業用地可以轉化為建設用地。擁有強烈的提高經濟增長的動機，城市領導利用他們的政治關系去爭取更多的指標。利用276 個地級市從2007 至2015 年的數據，我發現在其他條件相同的情況下，市領導和省領導有關聯的城市每年平均會多賣12%的新增建設用地（多收到12%的新增建設用地指標）。這些土地可以讓當年賣地毛收益額外增長3.6%，GDP 增長率額外增加0.04 個百分點。這種分配上的扭曲對經濟效率產生了重大影響，並且傷害了中國賢能政治的有效性。Ni, Shengqi.Thesis M.Phil. Chinese University of Hong Kong 2019.Includes bibliographical references (leaves 32-34).Abstracts also in Chinese.Title from PDF title page (viewed on 26, March 2021)