Local government bonds (LGBs) have become the most important tool of the Chinese state for financ... more Local government bonds (LGBs) have become the most important tool of the Chinese state for financing infrastructure projects. The underwriters and investors in LGBs are mostly commercial banks, with state actors holding the overwhelming majority of shares. We call these state-controlled market actors. This article investigates the role of state-controlled market actors in LGB issuance to extend the understanding of state actors and state–market relations in the financialisation of urban governance. The findings show that they underwrite and invest in LGBs to support the government's development objectives and make profits. They can hardly affect the government to create the terms and conditions of bonds to favour their financial interests, but they manage to make substantial profits. They follow the policy trends to identify LGBs as risk-free and reflexively change their investment priority towards the bonds. Due to the low interest rates, the banks mainly profit from bond trading in the secondary market and fiscal fund investment. There are preferential policies for LGB trading in the secondary market, and local governments deposit fiscal funds in the banks to motivate them to do LGB business. We argue that reflexively making investment decisions according to the policy environment and making profits by exploiting political resources represented by preferential policies and fiscal funds show the adaptability of the state-controlled market actors.
Transactions in planning and urban research, Jun 3, 2024
This paper uses the perspective of state entrepreneurialism to explore China's environmen... more This paper uses the perspective of state entrepreneurialism to explore China's environmental governance. The perspective illustrates how the Chinese state maintains its centrality, combining environmentalism and developmentalism while deploying flexible market development tools. This paper examines the Chengdu park-city model, an exemplar President Xi Jinping endorsed and widely emulated in China. The model combines the development of industrial and ecological spaces. It aims to deliver the central government's vision for ecological civilisation and the local government's economic development strategy. The development tools include land consolidation, financial mobilisation and an economic strategy that attempts to introduce 'urban scenes' into ecological spaces. This ecologically oriented development approach is more state-centred, contrasting with the neoliberal green growth machine.
In China, state-led financialisation through local government financing platforms resulted in a s... more In China, state-led financialisation through local government financing platforms resulted in a surge in local government debt. To manage financial risk, the central state introduced local government bonds (LGBs) to replace the platforms as the main financing source for infrastructure investment. The issuance of LGBs is subject to a budgetary process. We argue that LGBs mark a turn to state de-financialisation, as the local state's financial logic of maximising value extraction from the built environment is restricted by budgetary control. Through developing a database of LGB issuance in over 400 prefectural cities, this article reveals that local indebtedness determines the geographies of bond issuance, confirming the effect of the central state's objective of restricting local government debt. The dynamics of state-led financialisation change from the inter-jurisdictional competition in infrastructure investment among local states through local government financing platforms to a hierarchical control of LGB issuance led by the central state using the budget. Our findings show that financial expansion may mean state de-financialisation and fiscal resources are not only used to promote state-led financialisation but also to enable state de-financialisation.
By analysing the development and operation of local government bonds (LGBs), a new tool fashioned... more By analysing the development and operation of local government bonds (LGBs), a new tool fashioned by the Chinese government to finance infrastructure projects, this article improves the understanding of the political economy of China's local debt. We find that the central government uses LGBs to intervene in local debt and pursue policy objectives, and designs a quota system to decide the bond issuing amount and the project selection. When calculating quotas, the central government prioritizes limiting financial risk and achieving national development goals. Local debt should match the fiscal capacity of local governments, and the projects should contribute to the sectors emphasized by the central government as important for national development, reflecting the centralization of central–local relations. However, LGBs hardly fix the problem of local debt, and the pressure to maintain economic growth by expanding infrastructure investment has pushed local debt to an alarming level.
Paper Session - China's Shifting Urban-Rural Interfaces: 1China's 'urban villages'... more Paper Session - China's Shifting Urban-Rural Interfaces: 1China's 'urban villages' are a unique phenomenon in contemporary urbanisation, providing low cost living for low wage rural-urban and urban-urban migrants who rent from a new landlord class of former peasants blessed by the proximity of their former farms to a rapidly expanding city. This serendipitous distribution of land entitlements sets up new and long lasting divisions in urban Chinese society. But the entitlement story of urban villages is not confined to land entitlements. It is the bundle of rights to land, labour, capital, urban services and more generally, the agglomeration benefits created by many people co-locating in a city, that determine well-being, and wealth and poverty experiences and trajectories. In this paper we report on a study of urban village dwellers drawn randomly from Beijing, Shanghai and Guangzhou in which we examine patterns of household entitlements and their relationship to poverty. We adapt Sen's (1981) entitlement approach to incorporate the concepts of vulnerability and urban subsistence resource starvation (following Sen's analysis of food starvation as entitlement failure). Using regression models of household poverty functions, we identify the sensitivity of urban poverty to various degrees of entitlement failure. We relate the empirical analysis to Sen and de Sotos' theories of property rights and to the idea of the right to the city.link_to_OA_fulltex
Facing de-globalisation, changing international politics, climate changes and new smart technolog... more Facing de-globalisation, changing international politics, climate changes and new smart technologies in the post-pandemic era, city-regions become important spaces for economic, social and environmental governance. In China, this new city-regional form of governance is created under state entrepreneurialism, which means the state uses entrepreneurial endeavours to achieve its strategic vision and intention. The processes of city-region building include centralising the spatial planning system, inventing new spatial discourses, representing regional imaginaries and restructuring the state towards ecological goals. Instead of market-driven regional dynamics or redistributive politics, China’s city-regional governance demonstrates the role of the multi-scalar state in constructing and implementing economic, social and environmental policies at a regional scale.
The state remains central in contemporary environmental politics and policies, although environme... more The state remains central in contemporary environmental politics and policies, although environmental governance increasingly involves neoliberal and non-state mechanisms. Environmental management in China holds features of an ‘environmental state’ and has been undergoing continuous restructuring, manifested by a recent city-regionalism turn. Informed by the theories of eco-state restructuring (ESR) and eco-scalar fix, this paper investigates air pollution management in the Beijing-Tianjin-Hebei Region by tracing the practices of environmental and territorial governance over the past decades. Through the analysis of parameters of the eco-state, this paper conceptualises the air pollution governance in China into three phases, namely pollutants emission control (the 1990s–2005), campaign-style regional governance (2006–2012) and city-regionalism in air quality governance (2013 onwards). We find that the central state plays proactive but different roles in each phase, characterised by...
Financialized urban governance means that local governments have been increasingly reliant on fin... more Financialized urban governance means that local governments have been increasingly reliant on financial techniques and in some extreme cases, been captured by shareholders’ interests. However, financialized governance mutates with various characteristics of local governance. This paper unpacks financialized urban governance in China based on the operation of Shanghai Municipal Investment Corporation (SMI). The Shanghai municipal government uses SMI as an intermediary to finance urban development. Based on the latest corporatization of SMI, we illustrate an embryonic form of financialized governance in which the Shanghai municipal government relies on financial means especially shareholding to manage and support SMI. In doing so, the municipal government internalizes financial techniques to manage state assets, seek funding, and guide urban development projects. The power of the state is not undermined during the process of financialization. Instead, the Shanghai government extends i...
After millions of migrants moved from China’s countryside into its sprawling cities a unique kind... more After millions of migrants moved from China’s countryside into its sprawling cities a unique kind of ‘informal’ urban enclave was born – ‘villages in the city’. Like the shanties and favelas before them elsewhere, there has been huge pressure to redevelop these blemishes to the urban face of China’s economic vision. Unlike most developing countries, however, these are not squatter settlements but owner-occupied settlements developed semi-formally by ex-farmers turned small-developers and landlords who rent shockingly high-density rooms to rural migrants, who can outnumber their landlord villagers. A strong state, matched with well-organised landlords collectively represented through joint-stock companies, has meant that it has been relatively easy to grow the city through demolition of these soft migrant enclaves. The lives of the displaced migrants then enter a transient phase from an informal to a formal urbanity. This book looks at migrants and their enclave ‘villages in the city’ and reveals the characteristics and changes in migrants’ livelihoods and living places. Using an interdisciplinary approach, the book analyses how living in the city transforms and changes rural migrant households, and explores the social lives and micro economies of migrant neighbourhoods. It goes on to discuss changing housing and social conditions and spatial changes in the urban villages of major Chinese cities, as well as looking into transient urbanism and examining the consequences of redevelopment and upgrading of the ‘villages in the city’; in particular, the planning, regeneration, politics of development, and socio-economic implications of these immense social, economic and physical upheavals.
Local government bonds (LGBs) have become the most important tool of the Chinese state for financ... more Local government bonds (LGBs) have become the most important tool of the Chinese state for financing infrastructure projects. The underwriters and investors in LGBs are mostly commercial banks, with state actors holding the overwhelming majority of shares. We call these state-controlled market actors. This article investigates the role of state-controlled market actors in LGB issuance to extend the understanding of state actors and state–market relations in the financialisation of urban governance. The findings show that they underwrite and invest in LGBs to support the government's development objectives and make profits. They can hardly affect the government to create the terms and conditions of bonds to favour their financial interests, but they manage to make substantial profits. They follow the policy trends to identify LGBs as risk-free and reflexively change their investment priority towards the bonds. Due to the low interest rates, the banks mainly profit from bond trading in the secondary market and fiscal fund investment. There are preferential policies for LGB trading in the secondary market, and local governments deposit fiscal funds in the banks to motivate them to do LGB business. We argue that reflexively making investment decisions according to the policy environment and making profits by exploiting political resources represented by preferential policies and fiscal funds show the adaptability of the state-controlled market actors.
Transactions in planning and urban research, Jun 3, 2024
This paper uses the perspective of state entrepreneurialism to explore China's environmen... more This paper uses the perspective of state entrepreneurialism to explore China's environmental governance. The perspective illustrates how the Chinese state maintains its centrality, combining environmentalism and developmentalism while deploying flexible market development tools. This paper examines the Chengdu park-city model, an exemplar President Xi Jinping endorsed and widely emulated in China. The model combines the development of industrial and ecological spaces. It aims to deliver the central government's vision for ecological civilisation and the local government's economic development strategy. The development tools include land consolidation, financial mobilisation and an economic strategy that attempts to introduce 'urban scenes' into ecological spaces. This ecologically oriented development approach is more state-centred, contrasting with the neoliberal green growth machine.
In China, state-led financialisation through local government financing platforms resulted in a s... more In China, state-led financialisation through local government financing platforms resulted in a surge in local government debt. To manage financial risk, the central state introduced local government bonds (LGBs) to replace the platforms as the main financing source for infrastructure investment. The issuance of LGBs is subject to a budgetary process. We argue that LGBs mark a turn to state de-financialisation, as the local state's financial logic of maximising value extraction from the built environment is restricted by budgetary control. Through developing a database of LGB issuance in over 400 prefectural cities, this article reveals that local indebtedness determines the geographies of bond issuance, confirming the effect of the central state's objective of restricting local government debt. The dynamics of state-led financialisation change from the inter-jurisdictional competition in infrastructure investment among local states through local government financing platforms to a hierarchical control of LGB issuance led by the central state using the budget. Our findings show that financial expansion may mean state de-financialisation and fiscal resources are not only used to promote state-led financialisation but also to enable state de-financialisation.
By analysing the development and operation of local government bonds (LGBs), a new tool fashioned... more By analysing the development and operation of local government bonds (LGBs), a new tool fashioned by the Chinese government to finance infrastructure projects, this article improves the understanding of the political economy of China's local debt. We find that the central government uses LGBs to intervene in local debt and pursue policy objectives, and designs a quota system to decide the bond issuing amount and the project selection. When calculating quotas, the central government prioritizes limiting financial risk and achieving national development goals. Local debt should match the fiscal capacity of local governments, and the projects should contribute to the sectors emphasized by the central government as important for national development, reflecting the centralization of central–local relations. However, LGBs hardly fix the problem of local debt, and the pressure to maintain economic growth by expanding infrastructure investment has pushed local debt to an alarming level.
Paper Session - China's Shifting Urban-Rural Interfaces: 1China's 'urban villages'... more Paper Session - China's Shifting Urban-Rural Interfaces: 1China's 'urban villages' are a unique phenomenon in contemporary urbanisation, providing low cost living for low wage rural-urban and urban-urban migrants who rent from a new landlord class of former peasants blessed by the proximity of their former farms to a rapidly expanding city. This serendipitous distribution of land entitlements sets up new and long lasting divisions in urban Chinese society. But the entitlement story of urban villages is not confined to land entitlements. It is the bundle of rights to land, labour, capital, urban services and more generally, the agglomeration benefits created by many people co-locating in a city, that determine well-being, and wealth and poverty experiences and trajectories. In this paper we report on a study of urban village dwellers drawn randomly from Beijing, Shanghai and Guangzhou in which we examine patterns of household entitlements and their relationship to poverty. We adapt Sen's (1981) entitlement approach to incorporate the concepts of vulnerability and urban subsistence resource starvation (following Sen's analysis of food starvation as entitlement failure). Using regression models of household poverty functions, we identify the sensitivity of urban poverty to various degrees of entitlement failure. We relate the empirical analysis to Sen and de Sotos' theories of property rights and to the idea of the right to the city.link_to_OA_fulltex
Facing de-globalisation, changing international politics, climate changes and new smart technolog... more Facing de-globalisation, changing international politics, climate changes and new smart technologies in the post-pandemic era, city-regions become important spaces for economic, social and environmental governance. In China, this new city-regional form of governance is created under state entrepreneurialism, which means the state uses entrepreneurial endeavours to achieve its strategic vision and intention. The processes of city-region building include centralising the spatial planning system, inventing new spatial discourses, representing regional imaginaries and restructuring the state towards ecological goals. Instead of market-driven regional dynamics or redistributive politics, China’s city-regional governance demonstrates the role of the multi-scalar state in constructing and implementing economic, social and environmental policies at a regional scale.
The state remains central in contemporary environmental politics and policies, although environme... more The state remains central in contemporary environmental politics and policies, although environmental governance increasingly involves neoliberal and non-state mechanisms. Environmental management in China holds features of an ‘environmental state’ and has been undergoing continuous restructuring, manifested by a recent city-regionalism turn. Informed by the theories of eco-state restructuring (ESR) and eco-scalar fix, this paper investigates air pollution management in the Beijing-Tianjin-Hebei Region by tracing the practices of environmental and territorial governance over the past decades. Through the analysis of parameters of the eco-state, this paper conceptualises the air pollution governance in China into three phases, namely pollutants emission control (the 1990s–2005), campaign-style regional governance (2006–2012) and city-regionalism in air quality governance (2013 onwards). We find that the central state plays proactive but different roles in each phase, characterised by...
Financialized urban governance means that local governments have been increasingly reliant on fin... more Financialized urban governance means that local governments have been increasingly reliant on financial techniques and in some extreme cases, been captured by shareholders’ interests. However, financialized governance mutates with various characteristics of local governance. This paper unpacks financialized urban governance in China based on the operation of Shanghai Municipal Investment Corporation (SMI). The Shanghai municipal government uses SMI as an intermediary to finance urban development. Based on the latest corporatization of SMI, we illustrate an embryonic form of financialized governance in which the Shanghai municipal government relies on financial means especially shareholding to manage and support SMI. In doing so, the municipal government internalizes financial techniques to manage state assets, seek funding, and guide urban development projects. The power of the state is not undermined during the process of financialization. Instead, the Shanghai government extends i...
After millions of migrants moved from China’s countryside into its sprawling cities a unique kind... more After millions of migrants moved from China’s countryside into its sprawling cities a unique kind of ‘informal’ urban enclave was born – ‘villages in the city’. Like the shanties and favelas before them elsewhere, there has been huge pressure to redevelop these blemishes to the urban face of China’s economic vision. Unlike most developing countries, however, these are not squatter settlements but owner-occupied settlements developed semi-formally by ex-farmers turned small-developers and landlords who rent shockingly high-density rooms to rural migrants, who can outnumber their landlord villagers. A strong state, matched with well-organised landlords collectively represented through joint-stock companies, has meant that it has been relatively easy to grow the city through demolition of these soft migrant enclaves. The lives of the displaced migrants then enter a transient phase from an informal to a formal urbanity. This book looks at migrants and their enclave ‘villages in the city’ and reveals the characteristics and changes in migrants’ livelihoods and living places. Using an interdisciplinary approach, the book analyses how living in the city transforms and changes rural migrant households, and explores the social lives and micro economies of migrant neighbourhoods. It goes on to discuss changing housing and social conditions and spatial changes in the urban villages of major Chinese cities, as well as looking into transient urbanism and examining the consequences of redevelopment and upgrading of the ‘villages in the city’; in particular, the planning, regeneration, politics of development, and socio-economic implications of these immense social, economic and physical upheavals.
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