Power pyramid, hidden debt, and China’s urban expansion

    Juanfeng Zhang   Affiliation
    ; Lele Li Affiliation
    ; Danxia Zhang Affiliation
    ; Rui Han Affiliation
    ; Jiangxing Zhou Affiliation
    ; Lihua Zhang Affiliation


Chinese urban spatial expansion leads to inefficient use of land resources. This study uses the data of 289 cities from 2007 to 2018 and uses panel data models to test the driving mechanism of urban expansion. The study derives three conclusions. First, there is a significant positive correlation between urban power hierarchy and urban spatial expansion. If the urban administrative power hierarchy is high, then the urban built-up area increases more. Second, there is a significant positive correlation between the scale of hidden debt and the expansion of urban space. The increase of the urban investment bonds’ scale will promote the expansion of urban built-up areas. Third, there is a significant positive correlation between the quantity of bond issuers and urban spatial expansion.

First published online 04 January 2023

Keyword : spatial expansion, power hierarchy, hidden debt, financing platform, China

How to Cite
Zhang, J., Li, L., Zhang, D., Han, R., Zhou, J., & Zhang, L. (2022). Power pyramid, hidden debt, and China’s urban expansion. International Journal of Strategic Property Management, 26(6), 424–438.
Published in Issue
Dec 30, 2022
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Alonso, W. (1964). Location and land use: toward a general theory of land rent. Harvard University Press.

Brueckner, J. K., & Fansler, D. A. (1983). The economics of urban sprawl: theory and evidence on the spatial sizes of cities. The Review of Economics and Statistics, 65(3), 479–482.

Chan, R. C., & Zhao, X. B. (2002). The relationship between administrative hierarchy position and city size development in China. GeoJournal, 56, 97–112.

Chen, A., & Partridge, M. D. (2013). When are cities engines of growth in China? Spread and backwash effects across the urban hierarchy. Regional Studies, 47(8), 1313–1331.

Chen, J., & Wu, F. (2022). Housing and land financialization under the state ownership of land in China. Land Use Policy, 112, 104844.

Chen, J., Chang, K. T., Karacsonyi, D., & Zhang, X. (2014). Comparing urban land expansion and its driving factors in Shenzhen and Dongguan, China. Habitat International, 43, 61–71.

Chen, J., Gao, J., & Chen, W. (2016a). Urban land expansion and the transitional mechanisms in Nanjing, China. Habitat International, 53, 274–283.

Chen, M., Liu, W., & Lu, D. (2016b). Challenges and the way forward in China’s new-type urbanization. Land Use Policy, 55, 334–339.

Chen, Z., He, Z., & Liu, C. (2020). The financing of local government in China: stimulus loan wanes and shadow banking waxes. Journal of Financial Economics, 137(1), 42–71.

Cong, L. W., Gao, H., Ponticelli, J., & Yang, X. (2019). Credit allocation under economic stimulus: evidence from China. The Review of Financial Studies, 32(9), 3412–3460.

Deng, T., Wang, D., Hu, Y., & Liu, S. (2020). Did high-speed railway cause urban space expansion? – Empirical evidence from China’s prefecture-level cities. Research in Transportation Economics, 80, 100840.

Deng, X., Huang, J., Rozelle, S., & Uchida, E. (2008). Growth, population and industrialization, and urban land expansion of China. Journal of Urban Economics, 63(1), 96–115.

Fan, J., & Zhou, L. (2019). Three-dimensional intergovernmental competition and urban sprawl: evidence from Chinese prefectural-level cities. Land Use Policy, 87, 104035.

Feng, R., & Wang, K. (2021). Spatiotemporal effects of administrative division adjustment on urban expansion in China. Land Use Policy, 101, 105143.

Feng, Y., Wu, F., & Zhang, F. (2022). The development of local government financial vehicles in China: a case study of Jiaxing Chengtou. Land Use Policy, 112, 104793.

Gao, H. (2019). Public land leasing, public productive spending and economic growth in Chinese cities. Land Use Policy, 88, 104076.

Gao, M., Gu, Q., & He, S. (2022). Place-based policies, administrative hierarchy, and city growth: evidence from China. Economic Modelling, 115, 105952.

Guan, D., He, X., He, C., Cheng, L., & Qu, S. (2020). Does the urban sprawl matter in Yangtze River Economic Belt, China? An integrated analysis with urban sprawl index and one scenario analysis model. Cities, 99, 102611.

Guan, X., Wei, H., Lu, S., Dai, Q., & Su, H. (2018). Assessment on the urbanization strategy in China: achievements, challenges and reflections. Habitat International, 71, 97–109.

Han, L., Lu, M., Xiang, K., & Zhong, H. (2021). Density, distance and debt: new-town construction and local-government financial risks in China. Journal of Asian Economics, 77, 101376.

Hausman, J. A., & Taylor, W. E. (1981). Panel data and unobservable individual effects. Econometrica, 49(6), 1377–1398.

He, C., Huang, Z., & Wang, R. (2014). Land use change and economic growth in urban China: a structural equation analysis. Urban Studies, 51(13), 2880–2898.

Hong, Y., Yang S., & Li, L. (2017). Does Local governments’ investment and financing behavior since the beginning of the 21st century lead to uncoordinated development of urbanization in terms of land and population? China Soft Science, (5), 181–192 (in Chinese).

Ji, Y., Fu, W., & Yang, Y. (2019). Land financing, unbalanced urbanization and the risk of local government debt. Statistical Research, 36(7), 91–103 (in Chinese).

Jia, J., Liang, X., & Ma, G. (2021). Political hierarchy and regional economic development: evidence from a spatial discontinuity in China. Journal of Public Economics, 194, 104352.

Jia, M., Liu, Y., Lieske, S. N., & Chen, T. (2020). Public policy change and its impact on urban expansion: an evaluation of 265 cities in China. Land Use Policy, 97, 104754.

Li, G., Sun, S., & Fang, C. (2018). The varying driving forces of urban expansion in China: insights from a spatial-temporal analysis. Landscape and Urban Planning, 174, 63–77.

Li, H., Wei, Y. D., Liao, F. H., & Huang, Z. (2015). Administrative hierarchy and urban land expansion in transitional China. Applied Geography, 56, 177–186.

Li, X., Zhou, W., & Ouyang, Z. (2013). Forty years of urban expansion in Beijing: what is the relative importance of physical, socioeconomic, and neighborhood factors? Applied Geography, 38, 1–10.

Liu, Y., Yin, G., & Ma, L. J. (2012). Local state and administrative urbanization in post-reform China: a case study of Hebi City, Henan Province. Cities, 29(2), 107–117.

Liu, Y., Zhang, X., Kong, X., Wang, R., & Chen, L. (2018a). Identifying the relationship between urban land expansion and human activities in the Yangtze River Economic Belt, China. Applied Geography, 94, 163–177.

Liu, Z., Liu, S., Qi, W., & Jin, H. (2018b). Urban sprawl among Chinese cities of different population sizes. Habitat International, 79, 89–98.

Long, F., Zheng, L., & Song, Z. (2018). High-speed rail and urban expansion: an empirical study using a time series of nighttime light satellite data in China. Journal of Transport Geography, 72, 106–118.

Luan, X., & Li, Z. (2022). Financialization in the making of the new Wuhan. Land Use Policy, 112, 104602.

Luo, J., Zhang, X., Wu, Y., Shen, J., Shen, L., & Xing, X. (2018). Urban land expansion and the floating population in China: for production or for living? Cities, 74, 219–228.

Ma, J. (2013). Hidden fiscal risks in local China. Australian Journal of Public Administration, 72(3), 278–292.

Ma, L. J. (2005). Urban administrative restructuring, changing scale relations and local economic development in China. Political Geography, 24(4), 477–497.

Milan, B. F., & Creutzig, F. (2016). Municipal policies accelerated urban sprawl and public debts in Spain. Land Use Policy, 54, 103–115.

Mills, E. S. (1967). An aggregative model of resource allocation in a metropolitan area. The American Economic Review, 57(2), 197–210.

Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2018). China urban construction statistical yearbooks (2007–2018).

Muth, R. F. (1969). Cities and housing. University of Chicago Press.

National Bureau of Statistics of China. (2019a). China statistical yearbooks (2008–2019).

National Bureau of Statistics of China. (2019b). China city statistical yearbooks (2008–2019).

Pan, F., Zhang, F., Zhu, S., & Wójcik, D. (2017). Developing by borrowing? Inter-jurisdictional competition, land finance and local debt accumulation in China. Urban Studies, 54(4), 897–916.

Schneider, A., & Mertes, C. M. (2014). Expansion and growth in Chinese cities, 1978–2010. Environmental Research Letters, 9(2), 024008.

Scott, A. J., & Storper, M. (2015). The nature of cities: the scope and limits of urban theory. International Journal of Urban and Regional Research, 39(1), 1–15.

Shu, C., Xie, H., Jiang, J., & Chen, Q. (2018). Is urban land development driven by economic development or fiscal revenue stimuli in China? Land Use Policy, 77, 107–115.

Song, X., Chen, B., & Liang, Q. (2015). Geographical location disadvantage and public administrative spending growth in counties. Economic Research, 50(3), 32–46 (in Chinese).

Sun, Y., & Zhao, S. (2018). Spatiotemporal dynamics of urban expansion in 13 cities across the Jing-Jin-Ji Urban Agglomeration from 1978 to 2015. Ecological Indicators, 87, 302–313.

Tang, P., He, J., & Feng, X. (2022). Impact of cultural conflict on Chinese inbound tourism demand. Scientia Geographica Sinica, 42(4), 711–719 (in Chinese).

Tian, L. (2015). Land use dynamics driven by rural industrialization and land finance in the peri-urban areas of China: “The examples of Jiangyin and Shunde”. Land Use Policy, 45, 117–127.

Tiitu, M. (2018). Expansion of the built-up areas in Finnish city regions–the approach of travel-related urban zones. Applied Geography, 101, 1–13.

Tu, Y., Chen, B., Yu, L., Xin, Q., Gong, P., & Xu, B. (2021). How does urban expansion interact with cropland loss? A comparison of 14 Chinese cities from 1980 to 2015. Landscape Ecology, 36(1), 243–263.

Wang, J., & Zhang, X. (2022). Land-based urbanization in China: mismatched land development in the post-financial crisis era. Habitat International, 125, 102598.

Wang, J., Lin, Y., Glendinning, A., & Xu, Y. (2018). Land-use changes and land policies evolution in China’s urbanization processes. Land Use Policy, 75, 375–387.

Wang, P., Shao, Z., Wang, J., & Wu, Q. (2021). The impact of land finance on urban land use efficiency: a panel threshold model for Chinese provinces. Growth and Change, 52(1), 310–331.

Wei, H. (2015). The administrative hierarchy and growth of urban scale in China. Chinese Journal of Urban and Environmental Studies, 3(01), 1550001.

Wei, Y. D., Li, H., & Yue, W. (2017). Urban land expansion and regional inequality in transitional China. Landscape and Urban Planning, 163, 17–31.

Weilenmann, B., Seidl, I., & Schulz, T. (2017). The socio-economic determinants of urban sprawl between 1980 and 2010 in Switzerland. Landscape and Urban Planning, 157, 468–482.

Wheaton, W. C. (1974). A comparative static analysis of urban spatial structure. Journal of Economic Theory, 9(2), 223–237.

Wind Information Co., Ltd. (2019). Wind Economic Database (EDB).

Wu, F. (2022). Land financialisation and the financing of urban development in China. Land Use Policy, 112, 104412.

Wu, Y., Li, X., & Lin, G. C. (2016). Reproducing the city of the spectacle: mega-events, local debts, and infrastructure-led urbanization in China. Cities, 53, 51–60.

You, H., & Yang, X. (2017). Urban expansion in 30 megacities of China: categorizing the driving force profiles to inform the urbanization policy. Land Use Policy, 68, 531–551.

Yu, W., Zhang, Y., Zhou, W., Wang, W., & Tang, R. (2019). Urban expansion in Shenzhen since 1970s: a retrospect of change from a village to a megacity from the space. Physics and Chemistry of the Earth, Parts A/B/C, 110, 21–30.

Zeng, C., Zhang, A., Liu, L., & Liu, Y. (2017). Administrative restructuring and land-use intensity—a spatial explicit perspective. Land Use Policy, 67, 190–199.

Zhang, C., Miao, C., Zhang, W., & Chen, X. (2018). Spatiotemporal patterns of urban sprawl and its relationship with economic development in China during 1990–2010. Habitat International, 79, 51–60.

Zhang, J., Li, L., Yu, T., Gu, J., & Wen, H. (2021). Land assets, urban investment bonds, and local governments’ debt risk, China. International Journal of Strategic Property Management, 25(1), 65–75.

Zhang, J., Yu, T., Li, L., Zhang, D., Zhao, G., & Wen, H. (2020). Marketization allocation, land price, and local government land speculation, China. International Journal of Strategic Property Management, 24(5), 335–347.

Zhang, Q., & Su, S. (2016). Determinants of urban expansion and their relative importance: a comparative analysis of 30 major metropolitans in China. Habitat International, 58, 89–107.

Zhang, T. (2000). Land market forces and government’s role in sprawl: the case of China. Cities, 17(2), 123–135.

Zheng, H., Wang, X., & Cao, S. (2014). The land finance model jeopardizes China’s sustainable development. Habitat International, 44, 130–136.

Zhu, X., Qian, T., & Wei, Y. (2020). Do high-speed railways accelerate urban land expansion in China? A study based on the multi-stage difference-in-differences model. Socio-Economic Planning Sciences, 71, 100846.