Abstract: This chapter is organized as follows. In the second section we provide a descriptive analysis of “regional decentralization authoritarianism” as a general context for understanding China’s reform strategy (Section 2), followed by a brief discussion of the fiscal contracting system and the powerful incentive effects it has had on local officials in developing the non-state local economy (in particular the TVEs), in Section 3. In Section 4 we show the connection between fiscal recentralization and the demise of TVEs and subsequently also the waning interest of local governments in promoting enterprise growth, whereas Section 5 examines the new set of incentives that powerfully set the local states to keenly engage in hastening urbanization or specifically land conversion. Section 6 then looks into the problems of this urbanization strategy both from a resource-erosion (of farmland) standpoint but more so from the perspective concerning the violation of farmers’ property rights.Section 7 provides a brief conclusion.
