The land finance model jeopardizes China's sustainable development

China is undergoing rapid urbanization accompanied by rapid urban development and migration of rural populations to the cities. Because local governments are selling land to compensate for an unbalanced tax system that provides them with insufficient budgets, urban expansion is booming around the country. However, this form of land finance has grown out of control, in some cases producing uninhabited ghost towns, without any feedback from institutions that would limit the problem. Simultaneously, social problems have arisen from a failure to compensate the land's former residents for loss of their land and future livelihood, thereby jeopardizing China's social stability. This under-recognized contradiction created by urbanization is endangering China's environment and its socioeconomic development, and will endanger other developing countries seeking to emulate China's urbanization model. (C) 2014 Elsevier Ltd. All rights reserved.