Local Authority Role and Motivation

It is important to highlight, however, that in China the arm of the ‘state’ which plays the key roles of planning and land acquisition/servicing/repar- celling/disposal is the local authority (LA)—this is a major difference from Hong Kong. It is widely recognised that Chinese local authorities obtain a large part of their total revenues from this land development and sale process. This in turn gives them a strong incentive to plan and promote development, and to expedite its implementation, regardless of (a) the objective evidence on need and demand, or (b) the views and wishes of existing residents and occupiers of the peri-urban land or urban village enclaves which is often the target for new development/redevelopment. The issue of fiscal incentives is one which plays differently in different countries/systems. In the UK, it is widely believed that incentives are insufficient to motivate LAs to actively promote housing development (Barker 2004; Bramley 2012, 2015), despite recent attempts to increase explicit incentives. Incentives are also discussed in other chapters in this volume. Perhaps, it is important to recognise two levels to the incentives: the formal and overt fiscal benefit to the LA; and the informal and covert incentive of potential corrupt payments or benefits to village leaders, local officials and leaders.

The extent to which LAs are fiscally motivated to promote housing development will depend upon what other sources of revenue they have, as well as their service responsibilities and their awareness of the costs they are likely to incur in meeting those. This implies that an area for reform may involve restructuring of the financial bases of local government, so that it takes a more balanced view when taking planning decisions. However, the underlying driver appears to be, as in Hong Kong, a very strong commitment to growing the urban economy. In other words, the LA is acting on behalf of a very strong local ‘growth coalition’. Housing development will be supported if it can make reasonable claims to enhance the growth of the economy. This may mean that the LAs are quite strongly supportive of housing targeted at external or foreign investors, or housing for ‘key workers’, but less enthusiastic about public/social housing for the poor. These motivations surface in recent evidence on the ways cities have used the social and affordable housing programmes promoted since 2008.

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