Renewal of land-use term for urbanization in China: Sword of Damocles or Noah's Ark?

•Land finance brings a lot of problems and faces unsustainable source with limited land transferring in near future in China.•Property tax is a contentious issue in China due to the public ownership and one-off land use fees.•Proposing a compensatory mechanism based on land use term and property tax for renewal of land use term in China.•Providing alternative measures to promote urbanization while securing local finance in future in China.

Since early 2016, the expiration of a part of the land-use rights in China has elicited widespread public concern because of the ambiguous interpretation of relevant legal clauses. Land-finance-based urbanization is the primary fiscal source of Chinese local governments, but it has been considered unsustainable by many scholars. Numerous studies have been conducted on these two issues, but a comprehensive study that combines both issues is needed. This study attempts to analyze the relations between the two concepts from the perspective of demographic change in the following decades. It proposes a compensatory mechanism based on land-use term and property tax to deal with the renewal of land-use term and the unsustainability caused by land finance. Results provide an alternative approach for the local government to realize sustainable urbanization in the future.