Pathways out of land financialization: Understanding transformation strategies of urban investment insolvency and crisis

This paper seeks to elucidate how the state steers the dynamics of land (de-)financialization and the transitional strategies within urban development, particularly in the context of the real estate crisis. An empirical analysis of 25 debt resolution cases involving urban investment corporations in China was conducted, utilizing Qualitative Comparative Analysis to identify the pathways and decision-making processes that lead to various transition outcomes. The study uncovers three primary strategies: direct bailouts, productivity-oriented restructuring, and financialization-oriented restructuring. Of these, only productivity-oriented restructuring offers a viable route toward sustainable development post-crisis. Furthermore, five distinct pathways emerge, each corresponding to different strategies and outcomes. Among these, only the “Vanguard Productivilization” pathway leads to de-financialization and sustainable urban development. In contrast, local governments, lacking explicit central government support for bailouts, often resort to supporting affiliated corporations through pathways such as “Local Safe-Net” and “Local Finexus,” or, in some cases, promote financialization among lower-rated corporations, characterized as “Re-financialization Gamblers.” These findings highlight the urgent need for policy interventions to regulate decentralized debt resolution processes and to expand productivity-oriented restructuring options for resource-constrained local governments and corporations, offering a pathway away from excessive reliance on land financialization.