The Failure of Land-Driven Development: Challenges to Local State Entrepreneurialism in China

Abstract

This paper revisits urban entrepreneurialism in China. Existing studies have shown that Chinese local governments act entrepreneurially to generate revenue through land development. Yet insufficient attention has been paid to why and how this model may fail. Recently, the central government has strengthened environmental protection and tightened regulations on the real estate sector, thus changing the foundations of local entrepreneurial governance. We examine this transformation through Dali, a third-tier tourist city in southwestern China. By tracing the proposal, suspension, and planned relocation of Haidong New Town in Dali, we show how a land-driven development project failed because path-dependent real estate speculation was constrained by shifting state priorities and a volatile property market. This case demonstrates the changing political–economic conditions that made the model of urban entrepreneurialism infeasible. Consequently, the entrepreneurial local state becomes increasingly trapped by the land-development strategy on which it once relied.