Financialization of urban development in China: fantasy, fact or somewhere in between?

Abstract

It has been widely and persuasively argued that financialization is an ongoing and all-encompassing phenomenon within large swathes of contemporary capitalism. In particular, there has been much penetrative analysis of the impact of financialization on the built environment, especially in the run-up to and wake of the 2008 sub-prime mortgage crisis in the US. The term financialization itself, however, is open to a number of definitions both broad and more focused, and there is little agreement about how best to understand the concept. This paper inserts China into these debates through an examination of how urban and infrastructure projects are undertaken to ask whether financialization is a factor in the construction and operation of new urban and infrastructural landscapes in China. The paper takes as its interpretative lens the urban investment and development companies that fund, construct and then often operate and manage new projects on behalf of local government. It argues that the funding of development projects places increasing pressures on local governments and their corporations, and that there are signs these pressures are leading to a resort to securitized loans. While this would correspond to one definition of financialization, it does not, we argue, amount to a systemic move into a financialized stage of capitalism in corporatist China.

China’s extended urbanization driven by the “consumption city” in the context of financialized ecological civilization

“…The key role of the built environment in China’s growth has been increasingly linked to financialization by scholars, at least in urban geography (Chen et al, 2022; Jiang and Waley, 2021; Pan et al, 2017; Wu, 2019, 2021; Wu et al, 2020). This is more specifically the case in the post-GFC period, when scholars started to open the ‘black box’ of the financing circuits of urban production within the framework of growth and land revenue generation objectives implemented by local entrepreneurial states.…”

“…Two separate and quite contradictory perspectives are being debated. Some scholars discuss the role of the financialization of urban development (Chen, 2022; Jiang and Waley, 2021; Theurillat et al, 2016; Wu, 2019) in reinforcing state entrepreneurialism in China (Wu, 2018). To cope with the GFC and to further enhance growth, land has been used extensively as a financial asset to help develop financial instruments to renew the built environment in Chinese cities since at least 2008.…”

Financialised urban development: Chinese and (South-)East Asian observations

“…The state does not pursue a financialisation strategy per se. Recent studies highlight the specific development approach centred on UDICs (Feng, Wu and Zhang 2021;Jiang and Waley 2021). Jiang and Waley (2021) argue that the use of UDICs and consequent financialised sources does not mean that China is moving towards a financialised stage of capitalism.…”

“…Recent studies highlight the specific development approach centred on UDICs (Feng, Wu and Zhang 2021;Jiang and Waley 2021). Jiang and Waley (2021) argue that the use of UDICs and consequent financialised sources does not mean that China is moving towards a financialised stage of capitalism. Wu (2021) stresses that financialising the Chinese city has been driven by the state.…”

Can green city branding support China's Sponge City Programme?

“…Green Bonds could finance BGI, through for example the action of land value uplift on real estate, or increased business tax revenue from improved city competitiveness. From 2012 to 2014 China's central government allowed local governments to issue municipal bonds which, along with revenue from rolling development, have come to dominate urban development financing ( Jiang & Waley 2021). Green Bonds have also been issued in China, but not yet for SCP financing, and could be viable for retrofit programmes as well as signature BGI projects.…”