Building tall, falling short: An empirical assessment of Chinese skyscrapers

Ziyang Chen, Ting Chen, Yatang Lin*, Jin Wang

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

Abstract

This article examines the determinants and economic efficiency of state-led urbanization, increasingly the mantra of developing countries, focusing on China's skyscraper development as a prominent example. Employing a political economy lens, we find that local governments subsidized skyscraper development through discounted land prices to encourage the development of new urban agglomerations, particularly in cities where local leaders are motivated by stronger career incentives and during the central government's monetary easing policy period. But 5 to 10 years after completion, subsidized skyscrapers yield few spatial spillovers in land price premium, new business formation, or endogenous urban amenities, compared to unsubsidized ones. The lack of spillovers is caused by poor location, less reliable developers, and inadequate infrastructure. One important policy implication is that without careful consideration of local factors and related externalities, state interventions in urban development may fail to realize the fruits of public investment.

Original languageEnglish
Article number103731
Number of pages18
JournalJournal of Urban Economics
Volume145
DOIs
Publication statusPublished - Jan 2025

Scopus Subject Areas

  • Economics and Econometrics
  • Urban Studies

User-Defined Keywords

  • China
  • Government subsidy
  • Land value
  • Misallocation
  • Skyscrapers
  • Spillovers

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