Continuous reform efforts in urban China have scaled back direct government intervention by introducing freer land market trials. Anecdotal evidence reveals, however, that the liberal approach has yielded little advantageous result in Shenzhen, where such experiments are pioneered. By building on new institutionalist concepts and analyzing primary and secondary data, this paper demonstrates that deficiencies of formal rules created a policy vacuum, while informal constraints increased project uncertainty. Understanding the interwoven formal and informal institutional deficiencies adds new insights to the literature in explaining project outcomes and urban policy innovations in China’s urban transformation.
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