Speaker
Description
This study aims to understand the institution and governance for metro infrastructure financing at the local government level in China, where competing interests and negotiations could arise among public actors. In recent years, the metro system has been the main infrastructure investment - 53 cities across China built a metro system as of 2022. Moreover, Chinese metro companies are developing niches in urban rail transit business abroad (e.g., Pakistan, Ethiopia, Vietnam). The infrastructure-building comes with a substantial financial burden and heavy government debts. Previous studies on infrastructure-led development primarily focus on national-local relations, examining political centralisation and economic decentralisation between the state and cities and how local governments bargained for policy benefits from the central government. However, the metro is a project within local governments. Conflicts and negotiations regarding financing the metro could arise among the public actors in local governments, but the decision-making process is unclear. The focus on metro projects thus can highlight a larger issue regarding infrastructure financing and urban governance at local governments.
We theoretically framed the territorial negotiations for metro financing among public actors as localised bargaining. Objective disparities, power dynamics, and resource asymmetries among the city, its districts, and the metro SoE could lead to local bargaining. We used Guangzhou and its metro system as the case. Guangzhou has established an extensive metro network comprising 16 lines, and a similar size is at various stages of planning or construction. The substantial investments in the metro system have exerted significant financial pressure on the local government. The districts have diverse, decentralised political and economic resources. In addition, Guangzhou Metro, the municipal state-owned enterprise (SoE) responsible for the metro system, is transitioning from subsidy-dependent to self-financing in response to the financial burdens of municipal government. We conducted 29 interviews with government officials, SoE staff, and real estate developers and supplemented them with document analysis of land, planning, and transport policies.
Our findings reveal that localised bargaining among the city, districts, and metro SoEs primarily focuses on sharing land leasing fees and value capture rather than improving project quality. We demonstrate how the bargaining process shapes metro projects, including institution settings, line locations, and urban designs around stations. The power devolution from the city to the districts determines the bargaining between policy receipts and policymakers. In the authoritarian context with limited institutionalised mechanisms to resolve competing claims among influential political actors, their competition often relies on localised bargaining and backdoor deals. The political and economic nature of municipal SoEs further compounds it. As these SoEs transition towards self-financing and reducing reliance on subsidies, their focus shifts from fulfilling the municipal government's public transport responsibilities to actively pursuing profitable land and property development opportunities along metro lines and stations. The formation of coalitions among the city, districts, and the metro SoE regarding funding responsibility and sharing of land value increases ultimately determines the sub-optimal outcomes of the projects; for example, station accessibility is poorly designed, as they have never been central to the cost and payoff calculations during cooperative policy gaming.
China’s transport infrastructure investment has sparked global debates on using infrastructure-led development for urban and economic growth. This study enhances our understanding of how a political system operates within a hierarchical structure replicated across territorial levels in financing its transport infrastructure. Localised bargaining and institutional outcomes delineated the mechanisms by which the various public actors within local governments develop metro lines and how the model is intensified or bankrupted during the economic downturn in the housing market in China and elsewhere.
References
Ma, Xiao. (2022) Localized Bargaining: The Political Economy of China’s High-Speed Railway Program. Oxford University Press USA - OSO.
Sun, G., & Webster, C. (2024). Are gated communities capturing the lion’s share of metro accessibility? The path dependence, localised bargaining, and institutional outcomes in financing the development-oriented transit in China. Lincoln Insitute of Land Policy.
| Keywords | Infrastructure planning, negotiation, land financing, municipal state-owned enterprises, policy gaming |
|---|---|
| Best Congress Paper Award | Yes |
