Special economic zones and land misallocation: Evidence from Chinese cities

Abstract

This study examines the impact of China’s special economic zones (SEZs) on land misallocation, primarily using city-level data for China from 2003 to 2018. The findings indicate that establishing SEZs exacerbates land misallocation by over-allocating land to cities, resulting in an average annual loss of 0.22% of real urban GDP. After establishing SEZs, local governments change their land supply strategies by adjusting supply mode, object, and preference, reducing land allocation efficiency. Thus, the bundling of SEZs and government intervention is an essential cause of land misallocation. Furthermore, the geographical location of SEZs affects land allocation efficiency through the spatial form of cities. Its spatial separation from the core urban area is an essential cause of land misallocation. This study has important implications for more effective planning and implementation of SEZs.