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Understanding local government debt financing of infrastructure projects in China: Evidence based on accounting data from local government financing vehicles

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Bao, HXH 
Wang, Z 
Wu, RL 


This study develops an analytical framework to investigate the complex relationship between local government debt issuing for infrastructure financing, state control, land finance, and development activities in the private sector in China. Using local government financing vehicles’ accounting data, we find that local governments are working creatively to meet infrastructure development targets handed down by the central government. Moreover, local government financing vehicles became more responsive to development activities from the private sector in their debt issuing decisions after the regulations of local government debt issuing in 2013/14. By modelling the effect of three distinct forces, i.e., the central government, local governments, and the market, in one unified framework, our study provides reliable and practical evidence on how infrastructure financing works in China. Our research extends the studies of land finance into the infrastructure development domain. The findings are also helpful for studies on China’s land use policy under its leasehold land right system, and particularly the impacts of different land planning uses on infrastructure development.



4406 Human Geography, 35 Commerce, Management, Tourism and Services, 44 Human Society, 15 Life on Land

Journal Title

Land Use Policy

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Elsevier BV
Xu Yi Foundation for Financial Research (unknown)
Economic and Social Research Council (ES/P004296/1)