Fiscal incentive, political incentive, and strategic interaction of illegal land use by local governments

The Chinese-style decentralization that emerged in the 1990 s has brought about a period of economic growth. However, the drawbacks of decentralized reforms have also gradually drawn the attention of scholars. Local governments themselves, who are supposed to be the custodians of local land, have become the subjects of violations. The study analyzes illegal land use by local governments in the macro context of the entire Chinese economic transition. The trade-offs and constraints faced by local governments in committing illegal land use are evaluated, relevant hypotheses proposed, and a time-spatial dynamic panel data model is constructed through theoretical analysis. Finally, the results of the theoretical and empirical analyses are combined to initiate a more in-depth discussion on the underlying mechanisms of illegal land use by local government, thus attempting to further clarify the logic behind local government land violations in the context of economic growth. The main conclusions are as follows: (1) The development impulse of local governments under the Chinese-style decentralized structure, coupled with the imperfect horizontal accountability mechanism and the inherent defects of the land plan management system, has led to local governments’ repeated violation of land law. (2) There are significant strategic features of such illegal land use, which are manifested in path dependence in time and horizontal competition imitation in space. (3) The financial incentives of local governments and the promotion incentives of local officials have varying degrees of impact on the development of local governments. •It's a common phenomenon for local governments in China to use land illegally.•We propose a basic logic revolves around illegal land use by local governments in developing local economies.•Local governments’ development impulse under a mixed incentive structure is manifested in an irrational land use impulse.•The strategic characteristics show in the form of temporal path dependence and spatial strategic complementarity.•Financial incentive is stronger than promotion incentive for explaining local officials‘ motivation on illegal land use.