HOW WILL THE LAND REVENUE POLICY REFORM AFFECT CHINA’S ECONOMY? A SIMULATION ANALYSIS BASED ON GENERAL EQUILIBRIUM

The aim of this paper is to simulate the effect of land revenue policy reform in China under the shock of tax policy reform. To this end, this research has built a computable general equilibrium model and collected data from China’s input–output table for 2017 to construct the China land revenue social accounting matrix for 2017. Five scenarios of land reform policy have been considered. The first scenario concerns a reduction in the construction land supply; the simulation shows that the reform will lead to increasing real estate prices, which will result in a crowding-out effect for the manufacturing industry. The second scenario involves levying a property tax nationwide, which will restrain the trend of the increase in the real estate price and increase the local governments’ revenue, although household income and economic growth will be restrained. The third scenario has to do with a reduction in the deed tax. The simulation shows that this reform can alleviate the negative impact on the economy. The fourth scenario is related to a combination of the first and second scenarios, which will lead to a decrease in employment demand and an increase in land financial revenue. Finally, the fifth scenario is also a combined policy involving the first, second and third scenarios, which will result in higher urban and rural household income than the fourth scenario.