Industrial land use efficiency under government intervention: Evidence from Hangzhou, China

With a background of rapid urbanization and an already vast population in China, promoting land use efficiency to curb urban sprawl has significant influence upon sustainable urban development. As the “world's factory”, improving industrial land efficiency is pivotal in optimizing urban land use. Using a binary logistic analysis based on the data from 2000 to 2011 in Hangzhou, this paper analyzes whether the policy from the central government to promote industrial land leasing publicly at the end of 2006 reduced underdevelopment and idled land use behavior. It has been found that the industrial land use is more influenced by industry sub-type, the year of the land lease and land size than policy intervention. In light of strong government intervention, a lack of equity with a bundle of conditions for land development without strictly implementing measures that do not conform with land leasing contracts leads to one-on-one negotiation, relatively low land leasing prices compared to the secondary market land price, and low land use efficiency. Thus, this paper suggests that government intervention should focus more on promoting a more market-oriented environment with strict supervision during land development, rather than on specific conditions on each industry sub-type and factory.