A Tale of two cities – A comparative study of land conveyance decisions upon national policies and their impacts on land transaction prices in Beijing and Shanghai

Although urban land leasing is supposedly a local government matter, local leaderships' proactive pursual of economic growth for their career advancements can sometimes be at odds with national policies. Yet, how land conveyance decisions are made in midst of the implementation of national policies and land financing has been a rather overlooked aspect in the studies of China's land market. Hence, this paper explores this issue through a study of land conveyance decisions in Beijing and Shanghai's residential and commercial land markets from 2007 to 2018, and their subsequent land price effects. Deploying endogenous treatment effect models, it is revealed that land conveyance decisions in Beijing were highly subject to national policies and the status of its City Party Secretary, but not in Shanghai. Also, the use of Guapai resulted in higher residential and commercial land prices in Shanghai, but lower prices for Beijing's commercial land parcels. The findings indicate that Beijing, due to its closer proximity to the Central Government, appears to have stringently followed the national policy directions, whereas land officials in Shanghai seem to have had a higher degree of autonomy in their decisions. Additionally, the contrasting price effect of Guapai on land prices for residential and commercial land parcels enabled Beijing's government to compensate for the latent losses in land revenue when leasing residential land parcels, due to Nation #10, by leasing commercial parcels at higher prices via tender.