The Evolution of Ground Rent Economy in China and Countermeasures Research

This paper examines the phenomenon of land rent economics, focusing on how landowners generate income from renting out land and how this affects economic development. The research is grounded in China's rapid urbanization and economic transformation, where land has become a key asset. The use of land resources by local governments to finance infrastructure and economic growth has fueled urban sprawl, highlighting the critical role of land in China's financial strategy. This study explores the dynamic characteristics of land as a scarce resource by applying the theory of absolute land rent and differential land rent proposed by Marx. The paper delves into the Chinese context of highly centralized land ownership and state monopoly, and how the dual-track land system with separate urban and rural land markets facilitates the conversion of rural collective land to urban operational land, affecting local government revenues and the urbanization process. Through a detailed examination of the land transfer process, the article reveals the systemic financial risks of land financing and local government financing platforms. In addition, the article identifies the potential systemic risks posed by shadow banking activities and implicit government guarantees and assesses the measures taken by the government to mitigate these risks, including regulatory reforms and fiscal policies aimed at improving transparency and controlling debt levels.