The politics of land use conversion in china case study of a guangdong county 5

Chapter Five
Land Use Conversion in Sihui
5
Land Use Conversion in Sihui:
A Case Study
Figure 5.1 Sihui People’s Square and Government Buildings
Previous chapters have examined the general political and fiscal institutions that
structure local governments’ behaviour in supplying land for conversion. To account
for local variations in the extent of land use conversion, this chapter and the next
present a case study of Sihui with a focus on the determinants of land use
conversion at the county level as well as the township level.
As we shall see in this chapter, Sihui’s geographical landscape consists of a
relatively small area of flat terrain in comparison to the area of hilly and mountainous
land within its territory. The difficulty of developing land with accessibility and
infrastructure on mountainous terrain has been compounded by Sihui’s long-term
fiscal deficit. Yet the need to improve Sihui’s fiscal solvency has also compelled local
officials to exploit the land resources under their jurisdiction, which resulted in the
concentration of land use conversion and construction land in a few towns and the
city district located on flat plain. Riding on Pearl River Delta’s industrial relocation
Yew Chiew Ping
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Chapter Five
Land Use Conversion in Sihui
beginning from late 1990s and encouraged by the top-down emphasis on
industrialization, career-maximizing officials have flouted land use quotas in order to
meet their goals. The outcome is a conversion of agricultural land in excess of what
was initially planned as a survey of the area of agricultural land taken up for non-
agricultural development in Sihui reveals discrepancies when verified against the
county’s land use plan (tudi liyong zongti guihua).
1
Sihui’s Geography and Land Use Distribution

A county-level city of Zhaoqing, Sihui, whose name derived from the confluence of
four rivers in its territory, is situated on the northwestern fringe of the Pearl River
Delta.
2
As of 2005, the city had a population of 430,058, of which agricultural
population made up 67 percent and non-agricultural population 33 percent.
3
An
overwhelming 89 percent of Sihui’s 121,299 hectares of land is agricultural whereas
construction land and unused land take up 7.9 percent and 3.2 percent respectively.
4
This, however, does not mean that Sihui has an abundant supply of developable
agricultural land for conversion to non-agricultural purposes. Its geographical
landscape, which has a distinct impact on the way the city has evolved, imposes
severe limitations on the availability of agricultural land for conversion.
Sihui is dominated by mountainous and hilly terrain. The northwestern region,
including the towns of Weizheng, Jianglin, Huangtian and Shigou, is mountainous
1
The land use plan is important because the approval for converting land to non-agricultural use,
granted annually in batches by the next higher level of government, is tied to the approval for a locality’s
land use plan. The amount of arable land to be conserved and converted has to strictly adhere to that
determined in the land use plan at various administrative levels. According to Chapter 5, Article 44 of
the Land Administration Law: “Within the limits of the scale of land for construction in cities, villages or
towns confirmed by the overall land use plan, where agricultural land is to be converted to land for
construction to execute the aforementioned plan, approval is to be granted in batches in accordance
with the annual land use plan, by the organ that originally approved the overall land use plan.” See also
Keng, “China's Land Disposition System,” pp. 344.
2
Liu Weikeng, “Lingnan shezhi zuizao de liu xian zhiyi – Sihui” (“Sihui – one of the six counties set up
the earliest in Lingnan’s history”), Lingnan wenshi (Lingnan Cultural History), No. 3 (2006), pp. 12-14.

Sihui was administratively reclassified as a county-level city in November 1993. Refer to “Sihui shi
fazhan gaikuang” (“The general development of Sihui city”), Sihui government website,
, accessed 20 June 2007.
3
See Zhaoqing tongji nianjian 2006 (Zhaoqing Statistical Yearbook 2006), Wang Ronghua et al. (eds),
(Zhongguo tushu chubanshe), pp. 89.
4
Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua
tiaozheng shuoming” (“Explanation of adjustments in Sihui city’s land use master plan”), April 2005.
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Chapter Five
Land Use Conversion in Sihui
while the towns in central Sihui – Xiamao and Jianggu – are situated on hilly terrain.
Only southeastern Sihui is an alluvial plain through which the River Sui runs.
Figure 5.2 Map of Sihui
Sources: Available at
accessed 12 May 2008.
Yew Chiew Ping
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Chapter Five
Land Use Conversion in Sihui
A large part of Sihui’s land for construction falls within the southeastern territory. In
1996, most of Sihui’s land for construction was concentrated around the lower
reaches of River Sui, where the towns of Dongcheng, Chengzhong and Zhenshan
and Dasha took up 39.2 percent of the county’s total land for construction. Moreover,
Dongcheng, Chengzhong and Zhenshan alone accounted for 82 percent of the entire
county’s land for urban use. Fifty-seven percent of stand-alone mining and industrial
sites was also clustered in the southeastern town of Dasha, the rest being distributed
mostly in the Chengzhong and Dongcheng region. The transportation system was

most developed in the central and southeastern towns of Dasha, Jingkou, Jianggu,
Shigou, Longfu, Chengzhong and Dongcheng, Zhenshan, occupying more than 55
percent of Sihui’s total land for transportation (refer to Appendix A for a breakdown of
the land use distribution in each town).
5

According to Sihui’s land use plan, over the period of 1996-2010, agricultural land
and unused land in the entire county shrink by 92 hectares and 609 hectares
respectively while land for construction expands by 700 hectares mainly in the towns
of Dasha, Xinjiang, Huangtian, Zhenshan, Chengzhong, Dongcheng (see Table 5.1).
The period also witnesses the loss of 171 hectares of arable land.
6
Most of the land
for residential, industrial and mining sites is devoted to village settlements and for
use in the central city district of Dongcheng, Chengzhong and Zhenshan over the
period.
7
By 2010, only 2,065 hectares of land shall be devoted to industrial and
mining sites in the whole of Sihui, increasing by around 570 hectares from 1996.
8

5
Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua,
1996-2010” (Sihui city’s land use master plan, 1996-2010).
6
That said, there is no guarantee that the quality of arable land does not suffer in the process since
local governments are prone to using land of inferior quality and in remote locations for replacement.
Without further information, it is impossible to gauge the actual loss in cultivated land area.
7
“City district” in the context of Sihui refers to the areas of Dongcheng, Chengzhong and Zhenshan.

8
Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua, 1996-2010.”
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Chapter Five
Land Use Conversion in Sihui
Sihui’s land use plan also indicates that the distribution of different categories of land
does not change significantly from 1996 to 2010. By 2010, Dongcheng, Chengzhong,
Zhenshan and Dasha still account for 39.4 percent of the entire city’s land for
construction and 44 percent of the city’s land for residential, industrial and mining
sites. In the most developed city district, construction land as a proportion of Sihui’s
total construction land only increases from 22.6 percent in 1996 to 24.5 percent in
2010 while agricultural land area is reduced slightly from 8.89 percent to 8.65
percent. Roads are still concentrated in the same central and southeastern areas,
accounting for around 57.2 percent of the total land area taken up by roads.
9
Table 5.1 Land Use in Sihui (hectares)
1996 2000 2010 Difference
between 1996
and 2010
Total land area 121299.11 121299.11 121299.11 0
Land for agriculture 107988.13 107862.39 107896.11 -92.02
Arable land 23637.77 23590.36 23467.01 -170.76
Orchards 4242.72 4392.63 4397.65 +154.93
Forest land 65956.86 65856.69 66964.37 +1007.51
Grassland 108.31 101.65 110.00 +1.69
Water surfaces 14042.47 13921.06 12957.08 -1085.39
Land for construction 9419.69 9567.97 10120.67 +700.98
Residential, industrial & mining 6647.08 6766.10 7158.35 +511.27
1. Residential - - 2973.33 -

2. Industrial & mining - - 2065.02 -
3. Others - - 2120 -
Roads 1292.81 1320.18 1492.46 +199.65
Water conservancy 1479.80 1481.69 1469.86 -9.94
Unused land 3891.29 3868.75 3282.33 -608.96
Source: Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua
tiaozheng shuoming” (“Explanation of adjustments in Sihui city’s land use master plan”), April 2005.
Industrial Relocation from Eastern Pearl River Delta
Industrial restructuring and relocation from the more developed parts of Guangdong
since late 1999 had boosted the demand for construction land in Sihui. The recent
spate of industrialization in Sihui has to be seen in context of uneven development in
the Pearl River Delta.
10
Its western wing, which comprises of five prefectural-level
9
Refer to Appendix A.
10
Gu Chaolin, Shen Jianfa, Wong Kwan-yiu and Zhen Feng, “Regional Polarization under the Socialist-
Market System since 1978: A Case Study of Guangdong Province in South China,” Environment and
Planning A, Vol. 33, No. 1 (2001), pp. 97-119.
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Chapter Five
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cities including Zhaoqing, has registered a slower growth than its eastern wing.
Although 62 percent of the total population in the Pearl River Delta resided in the
western wing, which takes up half of its total area, it produced only 31.6 percent of
the region’s GDP in 2002. A development bottleneck, however, had set in with
shortages in cheap land and labour in the eastern Pear River Delta, leading investors
to turn to the western cities for less expensive land and labour.

11
Situated in the western Pearl River Delta, Zhaoqing is still a largely agricultural
prefecture-level city with a cultivated land area of 132,439 hectares, in contrast to
other highly industrialized prefectures, such as Dongguan, Foshan, Shantou, and so
on.
12
The prefecture’s location in the mountainous region and the underdevelopment
of roads had foiled its government’s attempts to draw investments through offering
affordable land and other factors of production in the mid 1990s.
13
With
improvements in its basic infrastructure over the years and China’s plan to construct
a bridge linking Hong Kong, Zhuhai and Macau by the end of 2009, the
developmental potential of the western Pearl River Delta looks to be greatly
enhanced in this decade.
14

In 2004, the Guangdong provincial government announced its decision to make
Zhaoqing the destination for foreign capital and the relocation of industries within the
Pearl River Delta.
15
Pearl River Delta’s industrial adjustment began in late 1990s as
11
Yeung Yue-man, “An Emerging Development Focus from the Pearl River Delta West to Western
Guangdong: A Research Report,” Eurasian Geography and Economics, Vol. 47, No. 2 (2006), pp.
245-46.
12
Guangdong tongji nianjian 2005, pp. 287; Zhaoqing tongji nianjian 2006 , pp. 389. Zhaoqing’s
composition of GDP by industry type is similar to that of Maoming, Meizhou, Shanwei, Heyuan,
Yangjiang, Qingyuan and Yunfu, and is therefore exemplary of a typical agricultural prefecture on the

road to industrialization and urbanization. See Guangdong tongji nianjian 2005, pp. 84.
13
Luo Xiaotian, “Xiujian huangjin lu, lutong caitong” (“Building the road to prosperity”), Zhujiang jingji
(Zhujiang’s Economy), No. 10 (1996), pp. 17-18; Xing Yi, “Zhaoshang yinzi xintiandi” (“New terrain in
drawing businesses and investments”), Zhujiang jingji (Zhujiang’s Economy), No. 10 (1996), pp. 19-20.
14
Yeung, “An Emerging Development Focus,” pp. 246; Chen Jianxing, “Fagaiwei: lizheng mingnian
niandiqian kaijian gangzhu’ao daqiao” (“The Committee of Development and Reform: Aiming to build the
Hong Kong-Zhuhai-Macau Bridge before the end of next year”), Xinhua meiri dianxun (Xinhua Daily
News), 12 November 2008, pp. 007.
15
Deng Honghua, “Fanzhu sanjiao fazhan zhanlüe zhong de ‘Zhaoqing xianxiang’,” (“The ‘Zhaoqing
phenomenon’ in the strategic development of the Pan Pearl River Delta”),Taisheng (Voice of Taiwan),
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Chapter Five
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traditional labour-intensive industries such as textiles, food and beverage, leather,
plastic and toy manufacturing, moved out of the region to make way for new
industries.
16
The diffusion and relocation of industries from nearby Foshan,
Guangzhou and Dongguan where land is in severe shortage has contributed to the
setting up of development zones in Sihui. In 1999, five industrial zones – in the towns
of Dongcheng, Chengzhong, Xinjiang, Longfu, and Nanjiang – were set up in Sihui to
“seize the historic opportunity of the Pearl River Delta’s industrial adjustment.”
17
In
November 2000, the first talk between business and government representatives
from the Pearl River Delta River and those from Guangdong’s mountainous region

took place, during which over 600 deals for cooperation and industrial relocation
were sealed.
18

The pace of industrial relocation quickened in 2001 when the Guangdong provincial
government embarked on a plan to adjust and upgrade its industrial structure.
19
One
of the strategies was to encourage the relocation of certain industries in the Pearl
River Delta to the less developed eastern, western and mountainous regions of the
province to solve problem of labour shortage, land saturation and others. Some of
these industries are heavy pollution industries, such as biochemical, pharmaceutical,
metal processing and so on. This is a deliberate strategy as one of the main reasons
for structural adjustment is the pressure of environmental degradation on the
development in the Pearl River Delta. From 2005, for instance, Shenzhen and
Dongguan had established environmental protection policies to eliminate heavy
No. (2004), pp. 64-65; Liang Ganghua, “Zhusanjiao chanye jiasu xiang zhoubian ‘shanzhuang zhuanyi’”
(“Pearl River Delta industries accelerating their transfer to surrounding regions”), Zhonghua xinwenbao
(Chinese News), 27 December 2007, pp. K01.
16
Wang Xianqing, “Zhusanjiao chanye zhuanyi : di’erci langchao xia de jueze” (“Industrial relocation in
the Pearl River Delta: making a choice under the second wave”), Zhujiang jingji (Pearl River Delta
Economy), No. Z1 (1997), pp. 22-25.
17
Sihui nianjian 2000, pp. 95.
18
Huang Jian, “Shoujie Zhusanjiao yu shanqu jinghe qiatanhui chengguo fengshuo” (“The first talk on
economic cooperation between Pearl River Delta and the mountainous region bears fruit”), Guangdong
kejibao (Guangdong Science News), 30 November 2000, pp. 001.
19

Yuefuban document no. 15 (2005), “Guangdongsheng renmin zhengfu bangongting guanyu yinfa
Guangdongsheng gongye chanye jiegou tiaozheng shishi fang’an [xiudingban] de tongzhi” (“A notice
from the Guangdong provincial people’s government office regarding the promulgation of the measures
for industrial restructuring in Guangdong [revised version]”).
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Chapter Five
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pollution industries and those using backwards and low productivity technology.
Some of these industries will be relocated to industrial parks in the mountainous
regions to “centralize pollution control.”
20

One such industrial zone is the Zhaoqing Municipal Asia Metal Recycling and
Processing Zone located in Longfu town of Sihui, which has been set up with the
approval of the provincial environmental protection bureau and the Guangdong
government. As its name indicates, it targets metal processing industries seeking
relocation. In 2008, at a meeting with potential investors in Shunde of Foshan, Sihui
signed agreements with 60 enterprises, of which 30 are metal processing industries,
19 relocating from the Pearl River Delta.
21

The local government’s decision to supply more land for industrial development in
Sihui had been encouraged by the top-down emphasis on industrialization. In a bid to
spur Sihui’s industrialization drive, local officials had adopted several measures, such
as using land to incentivize investments and using land proceeds to furnish monetary
benefits for cadres who bring in investments.
Top-down Emphasis on Industrialization
The industrialization of less developed regions had been exhorted by government
leaders of Guangdong. Guangdong provincial level leaders had repeatedly urged

Zhaoqing to quicken the pace of industrialization and urbanization.
22
Its governor, for
20
Wang Pang, “Zhusanjiao chanye dazhuanyi zhimian ‘huanjing menkan’,” (“Industrial Relocation in
Pearl River Delta confronts ‘environmental threshold’”), Zhongguo xinxibao (China Information News),
21 June 2006, pp. 002.
21
“Woshi chengwei chengjie Zhusanjiao hexinqu jinshu jiagong chanye de ‘wadi’” (“Sihui becomes the
‘collection point’ in receiving metal processing industries from the Pearl River Delta”), Sihui dianshitai
(Sihui TV Station), 23 April 2008, available at , accessed 14 May 2008.
22
Huang Huahua, “Ruiyi chuangxin, jiakuai fazhan” (“Innovation to speed up development”),
Guangdong jingji (Guangdong Economy), No. 11 (2004), pp. 6-9; Wang Chuilin, Zheng Jun and Yue
Zong, “Guangdong shanqu yao dali tuijin gongyehua jincheng” (“Guangdong’s mountainous region
should push for industrialization”), Minying jingji bao (Minying Economic News), 20 May 2005; Pan
Chaoyang, “Yong ‘fanzhusanjiao’ zhanlue tuijin Sihui shi (xian) yu jingji fazhan” (“Promote the economic
development of the Sihui region with a ‘pan Pearl River Delta’ strategy”), Xiandai xiangzhen (Modern
Town and Township), No. 3 (2005), pp. 41-43.
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Chapter Five
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instance, had called for a path of “new” and “hi-tech” industrial development for
Zhaoqing. He lamented that the prefecture’s GDP was “only 50 over billion yuan,”
23
prioritized industrialization over agriculture and stressed the importance of attracting
foreign investments to Zhaoqing:
I had been to Dawang, Zhaoqing’s new and hi-technology development zone.
Initially an agricultural farm, Dawang was transformed into a new and hi-tech

development zone. This is the right path to go because Dawang’s
development would be hampered had it chosen to promote agriculture. In
these two years, Dawang had attracted over 100 items and doubled its
financial strength through drawing investments and businesses. I hope
Zhaoqing can also create innovative ways of doing so, actively bring in
international consortiums as well as private enterprises within and outside of
Guangdong . . .
24
At the prefecture level, Zhaoqing aims to ride on the development of the Pearl River
Delta region and galvanize the industrialization of counties and cities along River Sui
including Sihui, Guangning and Huaiji to realize the goal of a “River Sui Industrial
Corridor.” The growth of development zones was encouraged by Zhaoqing
government to attract industries in the Pearl River Delta region seeking to relocate.
25

This development strategy was quickly adopted and echoed by Sihui’s local leaders.
In May 2005, Sihui’s mayor and Party secretary took the lead to promote the city to
investors in Shenzhen, bringing 32 enterprises to the county-city; Sihui’s Xiamao
town government also led a team to Foshan in 2006 to draw investors to the town’s
Longwan Ceramic Industrial Zone.
26
In an interview with the press, the city’s Party
23
The governor was mistaken. As of 2005, Zhaoqing’s GDP was 45 billion yuan, lower than what he
thought. Refer to Zhaoqing tongji nianjian 2006, pp. 389.
24
Huang Huahua, “Ruiyi chuangxin,” pp. 7.
25
“’Wucheng yiti’ daidong jingji kuaisu fazhan” (“‘Five zones in one’ to promote fast economic
development”), Zhongguo xinxi bao (China Information News), 25 November 2002, pp. T00; Liu

Shidong, “Dali fazhan nongcun jingji, tuidong Zhaoqing shixian kuayueshi fazhan” (“Strengthen village
economic development to promote Zhaoqing’s growth beyond boundaries”), Guangdong jingji
(Guangdong Economy), No. 2 (2004), pp. 112-14.
26
Xiao Lihuai and Ye Lanying, “Sihui zai Shen zhaoshang miaozhun chaoyiyuan xiangmu” (“Sihui’s
efforts to draw investments in Shenzhen aim for items beyong 100 million yuan”), Shenzhen shangbao
(Shenzhen Business News), 31 May 2005; “Xiamaozhen zai Foshan juxing Longwan taocicheng
zhaoshang tuijiehui” (“Xiamao town promotes Longwan Ceramic Zone in Foshan”), 12 January 2006,
Zhaoqing nongye xinxi wang (Zhaoqing Agricultural News Web), , accessed
15 October 2005.
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Chapter Five
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secretary urged the development of industrial zones and clearing of land to make
room for industries in the Pearl River Delta region seeking relocation:
To better accommodate the relocation of industries and make full use of
Sihui’s potential as the “nationwide top hundred small and medium cities with
the best investment potential” in 2006 . . .Sihui should ride on the brand name
of the [city’s] Provincial-Level Non-State Scientific Technology Zone to
spearhead the construction of industrial zones in the whole city, and spare no
effort in building 120 square kilometres of an industrial cluster zone. While
going all out to resolve the land bottleneck in drawing investments and
actively seeking higher quota of non-agricultural land from the upper levels,
we must clear up idle land, free up existing land stock for more efficient use of
land.
27
The Party secretary’s words highlight the tension between land and industrialization
in Sihui. Going by Sihui’s land use plan, the proposed 120 square kilometres (12,000
hectares) of industrial cluster zone has already exceeded the city’s designated area

of total construction land in 2010, which is 101.2 square kilometres (10,120 hectares)
in all for industrial, residential, mining, water conservancy and transport purposes
(See Table 5.1).
28
Yet land use quotas in Sihui have been cast aside by local cadres
in response to the top-down emphasis on industrialization.
The drawing of industries and the setting up of development zones in Sihui gained
pace from the early 2000s. After the Fuxi Industrial Zone was set up in 2001, other
towns in Sihui quickly followed suit to set up Xinjiang, Dongcheng, Chengzhong,
Zhenshan, Longfu and Fulong industrial zones. Smaller zones also sprung up in
other towns and villages.
29
As of 2002, Sihui city reportedly had 16 development
zones with a total area exceeding 20 square kilometres (2,000 hectares).
30
This land
area had already surpassed the 15.58 square kilometres (1,558 hectares) allocated
to industrial and mining sites in 2000 based on Sihui’s land use plan.
31
27
Liang Zhiqiang, “Dazao chengjie chanye zhuanye de qiaotoubao” (“Creating a bridgehead to
accommodate industrial relocation”), Nanfang ribao (Southern Post), 25 September 2007, pp. A12.
28
Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua tiaozheng shuoming.”
29
Sihui nianjian 2002, pp. 117, 198, 203-204, 208, 213, 215-216, 218, 220.
30
Gao Jiao, “Sihui shi gongye yuanqu jianshe de diaocha fenxi” (“A research and analysis on the
construction of industrial zones in Sihui city”), Tongji yu yuce (Statistics and Projection), No. 4 (2002),
pp. 53-55.

31
Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua, 1996-2010.”
Yew Chiew Ping
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During the 2003 moratorium on the approval for development zones, Sihui was
ordered by the State Council’s Office to scrap seven industrial zones in Xiamao,
Longfu, Longwan, Jianggu, Didou, Jingkou and Dongcheng.
32
Despite the central
government’s measures and regulations to cut down the number of development
zones, political leaders in Sihui continued to openly push for the construction of
zones and claimed that the city’s progress in this aspect was still “far from meeting
the upper level’s standards.”
33
As a result, more development zones continued to
spring up in Sihui in the past few years. From 2000 to 2005, Sihui’s gross industrial
output value more than doubled from 2.3 billion yuan to 4.8 billion yuan.
34
Table 5.2 lists the industrial zones undertaken by different levels of government in
Sihui over the years.
35
Of the existing zones in 2007, the planned area of five of
Sihui’s most prominent zones – Fuxi Industrial Zone, Nanjiang Industrial Zone,
Longwan Ceramic Industrial Zone, Xinjiang Hi-Tech Scientific Development Zone
and Zhaoqing Municipal Asia Metal Recycling and Processing Zone – is 44,950 mu
or 2,997 hectares, 932 hectares more than the quota of 2,065 hectares laid down in
the county’s land use plan (See Table 5.1).
36

32
Guoban faming dian document no. 30 (2003); Guangdong guotu ziyuan nianjian 2004, pp. 468.
33
“Shiweishi zhengfu yaoqiu jiakuai yuanqu jianshe” (“Shiwei city government urges the speeding up of
development zone construction”), Zhaoqing nongye xinxi wang (Zhaoqing Agricultural News Web),
http://www,gdzqagri.gov.cn, accessed 28 Jan 2005.
34
Zhaoqing tongji nianjian 2006, pp. 229; Sihui nianjian 2001, pp. 520.
35
Some zones may be defunct.
36
Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua tiaozheng shuoming.”
Yew Chiew Ping
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Chapter Five
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Table 5.2 Development Zones in Sihui
Sources: Fieldwork in Sihui, 2007; Sihui government website, , accessed on
various dates.
Using Land to Draw Investments and Businesses
The conversion of land to non-agricultural use has prevailed as a result of various
measures to promote industrialization, namely preferential treatment for investors
and other monetary incentives for cadres successful in drawing investments.
Back in 2004, Sihui had already implemented temporary preferential measures to
attract investors to the city’s then 11 development zones. Fifty-year land use rights
were conveyed at no more than 60,000 yuan per mu of land, inclusive of initial
development costs incurred for fixing up electricity and water, the construction of
Yew Chiew Ping
Zone Industry Type Location Planned

Area
(mu)
Xinjiang Hi-Tech Scientific Development
Zone
Metal processing, electronics, new
energy
Dongcheng 12,000
Zhaoqing Municipal Asia Metal Recycling
and Processing Zone
Metal recycling and processing Longfu 5,000
Fuxi Industrial Zone Hi-technology, garment, electronics,
food-processing
Dasha 10,000
France Industries Auxiliary Zone Garment, household appliances,
furniture and stationery
Dasha 3,000
Korea Locomotive Industrial Zone Locomotive, automobile parts Dasha 2,000
Mafang Industrial Zone Chemical industry, metal processing Dasha 3,000
Gangmei Industrial Zone Metal products, art and craft Dasha 600
Renma Industrial Zone - Dasha -
Dabu Industrial Zone - Dasha -
Nanjiang Industrial Zone Metal manufacturing, electronics,
bioengineering, garment production
and processing
7,950
Longwan Ceramic Industrial Zone Copper, ceramic construction
materials
Xiamao 10,000
Fulong Industrial Zone Metal electroplating Xiamao 1,010
Xiamao Industrial Zone Recycling, aluminium, chemical Xiamao 500

Loujiao Industrial Zone Processing Xiamao -
Mapo Industrial Zone Food processing Xiamao -
Gaoxin Zone Electronics, machinery Xiamao -
Chengzhong Industrial Zone Leather products Chengzhong 1,000+
Huijun Ecological Hi-Tech Metal
Processing Base
Metal processing Longfu 1,150+
Sihui Household Appliances Zone Household Appliances Jingkou 10,000
Jingkou Industrial Zone Medical equipment, electronics Jingkou 10,000
Guanshan Industrial Zone Metal processing Jingkou 3,000
Nanxiang Industrial Zone - Jingkou -
Tianhai Lake Tourist Resort Zone Hotel, entertainment and real estate Jingkou 9,000
Jingdaxing Paper Products Processing
Base
Paper processing Dongcheng 3,000
Sihui Zhenhui Park Resort with a golf course, five-star
hotel and commercial housing
Dongcheng 4,300
Shiling Industrial Zone Metal processing, garment Didou -
Dongping Industrial Base - Didou -
121
Chapter Five
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roads as well as the administrative charges for the land use certificate. Land was
also offered for rent at the lowest stipulated price in each industrial zone. There was
even a further “discount” for investments exceeding 50 million yuan or projects with a
short construction period. Various administrative charges, such as various license
fees, the construction enterprise management fee, urban basic infrastructure fee,
construction safety supervision and quality control fee were also waived.
37

In 2007, new measures were drawn up by Sihui’s government. Industries and
enterprises labelled as “high technology” may pay 50 percent of the land conveyance
fee as initial sum and the balance by instalment over the next three years.
38
On top of
the waiver of various administrative fees, enterprises that contribute tax amounting to
five million yuan and above in a year are entitled to a cash reward of 50,000 yuan. In
addition, there is a “progressive award” of 10,000 to 20,000 yuan for every million
yuan of tax increment using the sum of tax paid in 2006 as the base amount.
39

As from 2007, the Sihui government has allocated ten percent of the net income from
land conveyance as cash rewards for drawing businesses and investments of above
10 million yuan to the county-level city every year. The money is paid to a specialized
account managed and dispensed by the county’s finance bureau. Individuals are
entitled to a lump sum of up to 15,000 yuan while a danwei is rewarded with 5,000
yuan for every one million US dollars of foreign capital it secures. Additional 20
percent monetary reward is given to those who manage to fulfil 60 percent of the
year’s investment quota by June and a further 30 percent is awarded for the full
attainment of the quota by September.
40
These bonuses or monetary rewards vary by
37
“Sihuishi guli yuanqu gongye fazhan zanxing banfa” (“Tentative measures to promote industrial zone
development in Sihui city’”).
38
“Sihuishi gongye xiangmu touzi youhui banfa” (“Preferential measures for the investment of industrial
items in Sihui city”).
39

Sifu document no.4 (2007), “Yinfa ‘2007 nian Sihuishi nashui dahu jiangli banfa” (“Promulgation of
‘Measures to reward major tax payers in Sihui city in 2007”).
40
Sifu document no. 5 (2007), “Sihuishi zhaoshang yinzi jiangli zanxing banfa” (“Sihui city’s tentative
measures for rewarding the attraction of business and investment”); Siban document no. 14 (2007),
“Guanyu xiafa 2007 nian xishou waizi gongzuo jiangli banfa de tongzhi” (“Regarding the notice on the
Yew Chiew Ping
122
Chapter Five
Land Use Conversion in Sihui
sector and the amount of tax or investment contributed by the particular business
(see Table 5.3). Towns and street offices that bring in new enterprises are further
rewarded when the tax revenues collected from enterprises exceed the requirement
set by the county government.
Table 5.3 Monetary Rewards for Attracting Businesses and Investment to Sihui
Category A. Industry
Cash reward based on the amount of value-added tax (VAT) and enterprise income tax contributed by
the enterprise to local revenue in the first year:
1) A cash reward of 50,000 yuan for a tax contribution of one million yuan and above
2) A cash reward of 80,000 yuan for a tax contribution of three million yuan and above
3) A cash reward of 150,000 yuan for a tax contribution of five million yuan and above
Category B. Agriculture
Cash reward based on the amount of initial investment by the enterprise:
1) A cash reward of 30,000 yuan for an investment of 30 million yuan and above
2) A cash reward of 50,000 yuan for an investment of 50 million yuan and above
3) A cash reward of 80,000 yuan for an investment of 100 million yuan and above
Category C. Trade and Commerce, Tourism
Cash reward based on the amount of VAT and enterprise income tax contributed by the enterprise to
local revenue in the first year:
1) A cash reward of 50,000 yuan for a tax contribution of one million yuan and above

2) A cash reward of 80,000 yuan for a tax contribution of three million yuan and above
3) A cash reward of 150,000 yuan for a tax contribution of five million yuan and above
Source: Sifu document no. 5 (2007), “Sihuishi zhaoshang yinzi jiangli zanxing banfa.”
These incentives appear to be highly effective. In 2007, the GDP growth of Sihui hit
18 percent, surpassing that of other counties in Zhaoqing.
41
Sihui’s revenue was
reportedly the highest in Zhaoqing in the same year, hitting 436.72 million yuan and
recording a growth of 38 percent from the previous year. Tax revenue made up 62.3
percent of its total revenue, and the revenue growth was attributed to the promotion
of industrialization as ten out of 15 enterprises contributing over ten million yuan in
tax revenue each year were industrial enterprises.
42
For instance, a ceramic plant
taking up 1,000 mu of land in a development zone in Xiamao town had paid 110
million yuan for rights to the use of land alone, investing a total sum of 600 million
measures for rewarding the bringing in of foreign capital in 2007”).
41
“Woshi qunian jingji fazhan liangdian shanxian, GDP zengfu ju Zhaoqingshi diyi” (“Highlight in Sihui
city’s economic development last year; GDP growth is top in Zhaoqing city”), 25 January 2008,
Zhaoqing nongye xinxi wang (Zhaoqing Agricultural News Web), , accessed
21 April 2008.
42
“Woshi shishi chuangshui jihua jie shuoguo” (“Our city’s implementation of the tax increment plan
bears fruits”), 1 January 2008, Sihui government website, www.gdsihui.gov.cn, accessed 14 May 2008.
Yew Chiew Ping
123
Chapter Five
Land Use Conversion in Sihui
yuan and generating an estimated tax revenue of 2 million yuan.

43
Table 5.4 shows
the projected revenue and output of various industrial enterprises that chose to locate
or expand their production in Sihui in 2007. Together, the forecasted tax revenue
generated by these enterprises amounted to 1.67 billion yuan.
Table 5.4 Revenue from Industrial Enterprises in Sihui, 2007
Item Land Area
(mu)
Total
Investment
(million yuan)
Projected
Annual Output
(million yuan)
Projected Tax
Revenue (million
yuan)
1.Jingdaxing Paper Products
Processing Base
3,000 800 to 1,000 6,000 100
2. Zhejiang Shangguang
Group
594 1,000 15,000 600
3. Tenghui Huanan Mould
Processing Centre
200 200 3,000 50
4. Dahong Minggui 110 100 500 6
5. Huimei Apparel 10,000 8,500 26,000 250
6. Fuchang Aluminium
Products Limited

2,000 500 2,000 600
7. Jiaxin Glass Manufacturing
Limited
40 60 200 3
8. Kunpeng Recycling Limited 180 20 300 6
9. Lehua Ceramic Sanitary
Ware
1,000 600 300 2
10. Xingliao Nonferrous Metal
Limited
300 160 3,000 50
11. Zhengrong Thermal
Insulation Materials Limited
200 50 100 2
Source: “Sihuishi zhaoshang yinzi zhongdian gongye xiangmu.”
Government Engineered Urban Sprawl
Along with the development zone fever was a boom in Sihui’s real estate from the
late 1990s. There was a sudden expansion in the floor space of buildings
constructed, from 224,747 square metres in 1998 to 314,091 square metres in 1999.
This increased further to 354,375 square metres in 2001.
44
Over the past decade,
there were two sharp hikes in government investment in capital construction (see
Figure 5.3). From 1998 to 1999, government expenditure on capital construction
grew nearly tenfold from 1.09 million yuan to 10.67 million yuan. It more than doubled
from 2001 to 2003, reaching a high of 22.48 million yuan in 2003.
45

43
“Sihuishi zhaoshang yinzi zhongdian gongye xiangmu qingkuang tongjibiao” (“Statistics on prime

industrial projects drawn to Sihui city”), Sihui government website, , accessed
21 April 2008.
44
Sihui tongji nianjian 1990-2001, pp. 195
45
Zhongguo chengshi tongji nianjian 1997, Ren Caifang et al. (eds.), (Zhongguo tongji chubanshe,
1998), pp. 65; Sihui nianjian 2005.
Yew Chiew Ping
124
Chapter Five
Land Use Conversion in Sihui
Figure 5.3 Sihui’s Government Expenditure on Capital Construction (10,000
yuan)
Sources: Sihui nianjian 1998, pp. 220; Sihui nianjian 1999, pp. 256; Sihui nianjian 2000, pp. 233; Sihui
nianjian 2001, pp. 529; Sihui nianjian 2003, pp. 239; Sihui nianjian 2004, pp. 252; Sihui nianjian 2005,
pp. 267.
Urban building, including an expansion of the city district (chengqu), was part of Sihui
government’s ambition to attain a level of urbanization of over 70 percent by around
2010, financed through bank loans, private investments and subsidies from upper
level government while expropriating and amassing land.
46
The city district of Sihui
had already expanded from 19.2 square kilometres (1,920 hectares) in 2000 to 23.7
square kilometres (2,370 hectares)

in 2006, growing by 23.4 percent, which
surpassed the 14.1 percent growth in non-agricultural population from 2000 to
2005.
47
In 2004, Sihui government announced ambitious plans to expand city district

to beyond 48 square kilometres (4,800 hectares) in five years, with an urban
population and non-agricultural population of over half a million.
48
Given that the total
area of construction land in the city district spanning Dongcheng, Chengzhong and
Zhenshan is only 24.75 square kilometres (2,475 hectares) by 2010, the
government’s plan means that it will exceed the quota for construction land by 100
percent or more. Even if all the 3.84 square kilometres of unused land in the city
district is occupied for the expansion, the government will still have to take up over 20
square kilometres (2,000 hectares) of agricultural land to meet its target.
46
“Sihuishi 2004 nian zhengfu gongzuo baogao.”
47
Wu Sheng, “2006 nian zhengfu gongzuo baogao” (“Government report 2006”), 17 March 2006, Sihui
government website, , accessed 16 May 2008.
48
“Sihuishi 2004 nian zhengfu gongzuo baogao.”
Yew Chiew Ping
125
0
500
1000
1500
2000
2500
1996
1997
1998
1999
2000

2001
2002
2003
2004
Chapter Five
Land Use Conversion in Sihui
Furthermore, even if city expansion encroaches into the adjacent Xinjiang town, the
town has a total of only 4.95 square kilometres of construction land which the
government may utilize (Refer to Appendix A).
49
Through city expansion and infrastructure building, the Sihui government also
benefits from higher land prices and revenues. Its key strategy is to relocate its
cluster of government offices to the periphery of the city district to create another
“prime district.”
50
The new government buildings sit on 230,000 square metres (23
hectares) of land in the newly constructed Sihui People’s Square, unprecedented in
scale in Guangdong and about half the size of Tiananmen square. According to a
local informant, the Square had taken over what was previously fish ponds and
paddy fields. On its side is the 160,000 square metres (16 hectares) Sihui
International Jade Centre while across the square is the biggest shopping mall in
Sihui, the Sihui Times Square, which is built on 60,000 square metres (6 hectares) of
land. Various high-end residential apartments and bungalows have also been built in
the vicinity.
51
Under construction behind the government buildings, for instance, is a
161,831 square metres (16.18 hectares) housing estate equipped with residential,
business, education and sports facilities.
52

49
See Appendix A.
50
This is a strategy often used by Chinese governments to artificially push up land and property prices.
Liu Shan, “Zhengfu kaifashang shi chaodi de hengha er jiang.”
51
Yu Yang, “Sihui tuxian ‘diwang zhi wang’ qianneng” (“Sihui reveals its potential to be a prime land
district”), Xijiang ribao (Xijiang News), 5 December 2001.
52
“Woshi yipi zhongdian xiangmu jinxing jiancai huodong” (“A number of key projects launched in
Sihui”), Sihui dianshitai (Sihui TV Station), 30 December 2008, available at ,
accessed 14 March 2009.
Yew Chiew Ping
126
Chapter Five
Land Use Conversion in Sihui
Figure 5.4 Satellite Map of Sihui’s City District
Source: Available at accessed 14 May 2009.
This government engineered, land-centred “urbanization” has created a property
boom and driven up the prices of surrounding land and property. From 2004 to 2005,
investment in real estate had more than doubled in Sihui (see Figure 5.5). From 2005
to 2007, newly added residential floor space registered a growth of 75.5 percent from
158,400 square metres to 278,000 square metres. The price of commercial housing
in February 2008 supposedly rose to 2,560 yuan per square metre, more than double
that of five years ago. According to local residents, prices could even go as high as
4,200 yuan per square metre or more for top-end residential properties.
53
53
Zhaoqing tongji nianjian 2006, pp. 148; “Woshi quannian xinjian zhufang 27.8 wan pingfangmi,”
(“2,780,000 square metres of newly constructed residential houses in a year in our city”), available at ,

, accessed 15 May 2008. The average annual salary of workers was 16,096
yuan and that of peasants was 4,961 yuan in 2005. Refer to Sihui nianjian 2005
Yew Chiew Ping
127
Chapter Five
Land Use Conversion in Sihui
Figure 5.5 Investment in Fixed Assets in Sihui (10,000 yuan)
0
10000
20000
30000
40000
50000
60000
70000
80000
1997 2003 2004 2005
Inves tm ent in capital cons truction
Inves tm ent in re al e state developm ent
Sources: Guangdong tongji nianjian 1998, pp. 630; Guangdong tongji nianjian 2004, p. 620;
Guangdong tongji nianjian 2005, pp. 546; Zhaoqing tongji nianjian 2006, pp. 133.
Within two years from 2005 to 2007, the price of grade one land for commercial use
in Sihui city district had soared sevenfold from 240 yuan per square metre to 1780
yuan per square metre; the price of grade one land for residential use rose more than
eightfold from 96 yuan per square metre to 840 yuan per square metre while that of
industrial land rose by 13 times from 32 yuan per square metre to 420 yuan per
square metre. Prices of other grades of land with the city district also saw a close to
tenfold increase or even exceeding that (see Table 5.5).
54
In 2006, a tract of land of

17,081 square metres on the grounds of a resort hotel close to the Sihui People’s
Square was sold at a record-breaking 18.6 million yuan through bidding to a Shunde
property developer.
55
It has been estimated that land prices might rise to 500,000
yuan to one million yuan per mu, which will enable the government to recoup the
millions invested into city building in the past years.
56

54
Sifu document no. 51 (2005); Sifu document no. 12 (2007).
55
Xie Hui, “Sihui yidi 1860 wanyuan paichu chuang dankuai dipi chao dijia zuigao jilu” (“Land auctioned
for 18.6 million yuan, setting a record for highest price above minimum for a single tract of land”),
Nanfang ribao (Southern News), 6 January 2006.
56
“Sihui shidai guangchang shangmaocheng kaiye” (“Sihui Times Square commercial and trade centre
opens for business”), Xijiang ribao (Xijiang News),11 November 2006.
Yew Chiew Ping
128
Chapter Five
Land Use Conversion in Sihui
Table 5.5 Rates of land conveyance fee in Sihui (yuan per square metre)
Year
Land Grade
Usage
Grade 1 Grade 2 Grade 3 Grade 4 Grade 5
2005 Within city
district
Commercial 240.2 158.2 121.2 83.2 53.2

Housing 96.2 66.2 53.2 48.2 32.2
Industrial 32.2 23.2 19.2 16.2 -
Within towns/
townships
(vary by
district)
Commercial 20.2-63.
2
15.2-38.
2
28.2 - -
Housing 18.2-48.
2
13.2-32.
2
21.2 - -
Industrial 14.2-26.
2
11.2-19.
2
13.2 - -
Change of land
use
Industrial to
housing
63.2 43.2 33.2 30.2 28.2
Housing to
commercial
145.2 93.2 68.2 41.2 26.2
Industrial to

commercial
208.2 134.2 103.2 71.2 53.2
2007
Within city
district
Commercial 1780 1430 1050 700 390
Housing 840 660 470 370 280
Industrial 420 330 260 190 -
Sources: Sifu document no. 51 (2005), “Sihui shi tudi churangjin zanxing biaozhun” (“Temporary rates of
land conveyance fee in Sihui”); Sifu document no. 12 (2007), “Guanyu gongbu shishi xin jizhun dijia de
tongzhi (“Notice to announce the implementation of new basic land prices”).
The local government’s eagerness to accommodate relocating industries and its
enthusiasm with urban building, both encroaching upon agricultural land, are
reflective of its revenue maximizing behaviour mediated through the context of
Sihui’s fiscal system and requirements. The following section shows how
industrialization and the generated revenue from land development had helped to
improve Sihui’s fiscal solvency.
Sihui’s Fiscal Sharing System and Fiscal Situation
Since 1958, Sihui’s sum of expenditure had been greater than its revenue and it had
to rely on upper level subsidies each year to achieve fiscal balance. From 1952 to
1985, the county received subsidies amounting to 75.34 million yuan from the
prefecture and provincial governments.
57
From 1986 to 1993, it received a total
subsidy of 55.1 million yuan from upper level governments.
58

57
Sihuixian 1950-1985 nian tongji nianjian (Sihui County Statistical Yearbook 1950-1985), Sihuixian
tongjiju (ed).

58
Sihuixian zhi (History of Sihui County), (Guangdong renmin chubanshe, 1996).
Yew Chiew Ping
129
Chapter Five
Land Use Conversion in Sihui
After the implementation of the revenue-sharing system in 1994, Sihui’s finances
remained heavily subsidized by the upper level governments. The city had been
receiving tax revenue returns (shuishou fanhuan) from the central government, which
was around 50 percent of what it remits to the latter. On top of the tax returns, it also
received varying amounts of subsidy from upper level governments each year, such
as 95.9 million yuan in 2000, and 130.4 million yuan in 2004.
59
Nonetheless, although
Sihui’s fiscal revenue had grown steadily from 75.8 million yuan in 1996 to 203.1
million yuan in 2004 at the annual rate of 13.1 percent, its expenditure had increased
slightly faster at the annual rate of 14.4 percent, from 132.9 million yuan to 384.6
million yuan over the same period.
60
Post-1994 fiscal reforms, such as the cancellation of the agricultural taxes, have put
additional pressure on Sihui’s finances and forced its government to seek alternative
revenue sources and expand the collection of other existing local taxes. In 2000
alone, Sihui collected 1.3 billion yuan in village taxes and fees, which was 65.7
percent lower than the sum of 2.5 billion yuan collected in 1999.
61
Subsequently, to
make up for the loss in revenue due to the scrapping of special agricultural product
tax, agriculture and livestock farming tax and village fees, the Sihui government
stepped up efforts to collect the remaining two agricultural taxes. In the first half of
2006, for instance, total revenue from contract tax and arable land use tax amounted

to over 10 million yuan, which was 50 percent higher than the sum collected in the
first half of 2005, and exceeded the amount collected in the whole of 2005.
62
The
59
Sihui nianjian 1998, pp.121; Sihui nianjian 2002, pp. 119; Sihui nianjian 2005, pp. 137.
60
Sihui nianjian 1998, pp. 220 ; Sihui nianjian 1999, pp. 256 ; Sihui nianjian 2000, pp. 233 ; Sihui
nianjian 2001, pp. 529 ; Sihui nianjian 2002, pp. 247 ; Sihui nianjian 2003, pp. 239 ; Sihui nianjian 2004
pp. 251-52; Sihui nianjian 2005, pp. 266-67.
61
Zhang Ruxu, “Sihuishi wenbu tuijin shuifei gaige” (“Sihui city pushes for tax reforms steadily”),
Zhongguo jiancha (China Surveillance), No. 10 (2001), pp. 14.
62
Ou Qiupei, “Woshi jiji tuijin qishui, gengdi zhanyong shui zizheng gongzuo” (“Sihui city actively
promotes the self-collection of contract tax and arable land use tax”), 14 June 2005, Sihui government
website, , accessed 21 April 2008; Wu Xiaobing, “Woshi shangbannian qishui
he gengdi zhanyong shui shixian dafu zengzhang” (“Sihui city’s contract tax and arable land use tax
grows by a large margin in the first half of the year”), 3 August 2006, Sihui government website,
, accessed 21 April 2008.
Yew Chiew Ping
130
Chapter Five
Land Use Conversion in Sihui
sum of these two taxes had doubled that of 1999, which was 5.1 million yuan.
63
Both
the contract tax and arable land use tax are land-related taxes – the former is levied
on the conveyance and transfer of land use rights at the rate of three to five percent
while the latter is levied on the taking of arable land for non-agricultural purposes at

the rate of one to ten yuan per square metre.
64
As with the nationwide rise in business tax after the 1994 tax reforms, earnings from
business tax in Sihui increased from 14.5 million yuan to 37.5 million yuan from 1996
to 2004. From 2001 to 2004, business tax grew by over 60 percent as revenues from
agricultural taxes – special agricultural product tax, agriculture and livestock farming
tax, contract tax and arable land use tax – dropped sharply with the nationwide move
to cut village fees and taxes (see Figure 5.6).
63
Sihui shi caizhengju “Sihui shi caizheng yusuan shouzhi zhixing qingkuang 1999 nian shiyi yue”
(“Sihui city’s execution of finance budget revenues and expenditures in November 1999”), 5 December
2005.
64
Guowuyuanling document no. 224 (1997),“Zhonghua renmin gongheguo qishui zanxing tiaoli” (“The
PRC provisional rules on the contract tax”); Guowuyuanling document no. 511 (2007),“Zhonghua
renmin gongheguo gengdi zanyongshui zanxing tiaoli” (“The PRC provisional rules on the arable land
use tax”). Effective from 1 January 2008, the rate of arable land use tax has increased to five to 50 yuan
per square metre.
Yew Chiew Ping
131
Chapter Five
Land Use Conversion in Sihui
Figure 5.6 Revenues of Sihui, 1996-2004 (10,000 yuan)
0
500
1000
1500
2000
2500
3000

3500
4000
Agricultural Taxes
Bus ine s s Tax
Value-Added Tax
Enterprise Incom e Tax
Sources: Sihui nianjian 1998 (Sihui Yearbook 1998), Zhang Timing et al. (eds.), pp. 220 ; Sihui nianjian
1999 (Sihui Yearbook 1999), Zhang Timing et al. (eds.), pp. 256 ; Sihui nianjian 2000 (Sihui Yearbook
2000), Zhang Timing et al. (eds.), pp. 233 ; Sihui nianjian 2001 (Sihui Yearbook 2001), Zhang Timing et
al. (eds.), pp. 529 ; Sihui nianjian 2002 (Sihui Yearbook 2002), Yao Weiliang et al. (eds.), pp. 247 ; Sihui
nianjian 2003 (Sihui Yearbook 2003), Yao Weiliang et al. (eds.), pp. 239 ; Sihui nianjian 2004 (Sihui
Yearbook 2004), Yao Weiliang et al. (eds.), pp. 251; Sihui nianjian 2005 (Sihui Yearbook 2005), Yao
Weiliang et al. (eds.), pp. 266.
Business tax is levied on nine categories of industries and transactions, including
three categories of land-related industries and transactions – construction industry,
the transfer of intangible assets (land use rights) and the sale of property (refer to
Table 5.6). In 2005 alone, 185.8 million yuan worth of residential property was sold in
Sihui, which contributed 9.29 million yuan of business tax. Using the 252.2 million
yuan of gross construction output value as a gauge of the industry turnover, business
tax levied on Sihui’s construction industry is estimated to be around 7.57 million yuan
Yew Chiew Ping
132
0
1000
2000
3000
4000
5000
6000
7000

8000
9000
10000
1996
1997
1998
1999
2000
2001
2002
2003
2004
Governm ent Funds and Othe rs
Chapter Five
Land Use Conversion in Sihui
in 2005.
65
In addition, the conveyance of land use rights in the same year would have
fetched total business tax of 5.66 million yuan (see Table 5.6). Together, business
tax from land related industries and transactions is estimated to be 22.52 million
yuan, which is around 45 percent of the total business tax revenue in 2005.
66
Table 5.6 Business Tax Rates
Taxable Item Tax Rate
1 Transport industry 3%
2 Construction industry 3%
3 Finance and insurance industry 5%
4 Communications industry 3%
5 Culture and sports industry 3%
6 Entertainment industry 5%-20%

7 Service industry 5%
8 Transfer of intangible assets 5%
9 Sale of property 5%
Source: Guowuyuanling document no. 540 (2008),“Zhonghua renmin gongheguo yingyeshui zanxing
tiaoli” (“The PRC provisional rules on the business tax”).
Nonetheless, extrabudgetary government funds had been the main driving force for
revenue growth in Sihui since 1994. Sihui’s government funds and other revenues
had shown the greatest rise since 1996, growing more than fivefold from 18.4 million
yuan in 1996 to 94.7 million yuan in 2004. Growth accelerated from 2002 onwards
with the reclassification of local income taxes as shared taxes. From 2002 to 2004
alone, government funds rose by 86 percent, in contrast to the growth rate of 12.6
percent from 2000 to 2002 (see Figure 5.6).
Based on the incomplete data on land conveyances in Sihui in Table 5.7, it appears
that land conveyance fee, as a type of government funds, has contributed
significantly to the growth in the county’s extrabudgetary funds. From 2000 to 2004,
revenue from land conveyance amounted to 206.46 million yuan, which is more than
67 percent of the total income from government funds and others over the same
period. This does not include other sources of land revenues such as the
miscellaneous ad hoc fees, which may constitute a substantial sum of income for the
65
Zhaoqing tongji nianjian 2006, pp. 149, 257.
66
Sihui tongji nianjian 2005, pp. 123.
Yew Chiew Ping
133
Chapter Five
Land Use Conversion in Sihui
local government. In 2002, for instance, the Sihui Land Bureau alone collected 5.27
million yuan of administrative fees.
67

Table 5.8 lists the fees levied by the Sihui Land
Bureau. Note that these do not include arbitrary fees charged by other government
departments.
68
There is also the likelihood that not all land proceeds are reflected in
the sum of extrabudgetary funds. In 2004, for example, Sihui’s partial land
conveyance revenue was 93.4 million yuan. This alone constitutes 98.6 percent of
total revenue from the 94.7 million yuan of government funds that year.
69
Table 5.7 Land Conveyance in Sihui’s Primary Land Market
2000 2001 2002 2003 2004 2005 2006 2007
Total number of land
conveyances
- - 99 - 600 355 - -
Total area of land
conveyed (hectares)
- - 40.5 - 73.8 178.8 - -
By bidding
Number of transactions 7 5 18 52 33 29 - -
Land area (hectares) 1.55 17.58 5.2 5.3 44.1 44.1 - -
Transaction sum (10,000
yuan)
3465 3647 1112 1800 7933 7882 - -
Average price per
hectare (10,000 yuan)
2235.5 207.5 213.8 339.6 179.9 178.7 - -
By auction
Number of transactions - - - 4 4 - 4 2
Land area (hectares) - - - 2.75 3.61 - 44.17 10.02
Transaction sum (10,000

yuan)
- - - 1281.5 1407 - 14194.5 35515
Average price per
hectare (10,000 yuan)
- - - 466 389.8 - 321.4 3544.4
By negotiation
Number of transactions - - - - - 13 - -
Land area (hectares) - - - - - 45.9 - -
Transaction sum (10,000
yuan)
- - - - - 3443 - -
Average price per
hectare (10,000 yuan)
- - - - - 75.0 - -
Sources: Sihui Land Bureau; Guangdong guotu ziyuan nianjian 2002, pp. 341; Guangdong guotu
ziyuan nianjian 2003, pp. 401; Guangdong guotu ziyuan nianjian 2004, pp. 469; Guangdong guotu
ziyuan nianjian 2005, pp. 317; Guangdong guotu ziyuan nianjian 2006, pp. 378; Zhaoqing tongji nianjian
2006, pp. 79.
67
Guangdong guotu ziyuan nianjian 2003, pp. 401.
68
Note that these do not include arbitrary fees charged by other government departments. Refer to
Table 3.4 in Chapter Three.
69
Refer to Zhaoqing tongji nianjian 2006, pp. 165 for the amount of Sihui’s revenue in 2004 and 2005.
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