Rapid urbanisation in China has led to a substantial decrease in agricultural land. To address this unsustainable form of urban development, the Chinese government has implemented the ‘Linkage’ Policy (Zengjian Guagou), which requires any increase in new urban land by local governments to be compensated for with an equivalent amount of new arable land. This paper examines the institutional changes and the implications for China’s land production and development arising from this mechanism of transferring land development rights from the rural to the urban sectors. Using Chengdu as a case study, our research concludes that this institutional mechanism has conferred commodified and tradeable development rights on rural land, leading to the emergence and direct involvement of new players in village land consolidation, resettlement of affected villagers and, indirectly, in the supply of new urban land. Process efficiency has been improved with the local governments, developers and village collectives capitalising on their niches in village improvement projects. The conventional state-led model of land production is enriched with bottom-up market initiatives, and villagers have more choices to realise their land property rights under the dual land market. Land use efficiency has been enhanced by the reallocation of construction land potential. However, infringements of villagers’ interests and negative impacts on balanced regional development under this policy were also found.
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