China’s local government have been financing their wealth mostly by selling off land. As debts to fuel economic growth rise, more land sales might be on the agenda, tells financial and political analyst Victor Shih in Bloomberg, increasing the gap between rich and poor.
Cities may have to accelerate land sales as they struggle to repay the debt, said Victor Shih, a professor at Northwestern University in Evanston, Illinois, who studies China’s local- government finances. There’s also an incentive for officials to keep payments to farmers as low as possible, he said.
“Without suppressing land compensation, local governments can’t make the margins to pay back the banks,” Shih said. “In essence, they are the engines of inequality in China. Land development is the redistribution of income from average households to rich households.”
- China’s melting bank deposits – Victor Shih (chinaspeakersbureau.info)
- Pay back time for the Beijing Olympics – Victor Shih (chinaspeakersbureau.info)
- Why China’s banks are different – Victor Shih (chinaspeakersbureau.info)
- Most sought-after speakers October 2011 (chinaspeakersbureau.info)
- Corruption stifles genuine entrepreneurship – Victor Shih (chinaspeakersbureau.info)