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Expansion of market finance and urban development in Asia, the case of China and India – FINURBASIE

The financialization of urban production in China and India

Since the financiarisation of property was at the root of systemic crises that have become recurrent, it is vital to measure its progress in the most populated countries of the planet, sites of strong economic and urban growth. Knowledge of this issue is, however, singularly lacking. The FINURBASIE project intends to remedy this deficiency by exploring the transregional and transnational mechanisms that govern the financing of urban growth in China and India.

Characterising the financial investment circuits within the property sector, observing methods of territorial anchorage of capital, and the effects of these on the urban structure.

The aim of the project is to go beyond generalized, aspatial approaches and examine the geographies of these financial circuits and underline their processes of territorial differentiation. This means removing obstacles linked to the opacity of information in these countries by developing in-depth knowledge of the arrangement between fund managers and local property industries in such a way so as to study their influence on the material, symbolic and political production of urban space. This major empirical contribution should enable us to assess the vulnerability of these countries to systemic risks and develop the theorization, still embryonic, of the links between financial globalization and urban development.

In both China and India, the identification of the forms and regulation of the financial circuits of property investment have been made possible by surveys conducted amongst a wide variety of players in metropolitan areas — privileged sites of financial investment — as well as in smaller urban entities. This empirical material has been usefully completed by the exploitation of articles in the press and reports published by the property industry. In addition, we have analysed the rise in power of a small number of developers involved in the mediation of foreign and domestic financial investment. Lastly, data bases on China were used to enable us to visualise the capitalistic links between companies in the construction/property/architecture sectors (ORBIS data) on a large-scale, and to model the effects of capital transfers from the towns to the country through the property investments of migrants in their region of origin (China Household Income Project Survey).

The comparison between China and India has revealed three main points of convergence: the weakness of the incoming flows of financial capital into property; the empowerment of local developers that anchor foreign capital, and the strong support of the State for the process of financialisation. However, although the Indian experience is similar to that of other emerging countries, China has taken a new route through the growing informal financialisation of the built environment encouraged by the State and characterised by strong fragmentation and the predominance of national players. Although the weakness of the transnational financial circuits potentially limits systemic risks, insufficient control of “grey finance” and the primordial role of property as saving vehicle expose China to the threat of a multidimensional crisis in the case of a reversal of the current speculative mechanism.

Our research may be expanded in three main directions:
1. To expand the comparision between India and China by taking into account the role of land/real estate in the strategies of local officials to enhance their working position, and the subsequent effect on the forms of urban development.
2. To explore offshore property investment by China's domestic institutional investors and developers . A fieldwork in Malaisia has been launched as part of the FUNERASIE project.
3. To make a more comprehensive use of the ORBIS database


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FINURBASIE is a research project jointly developed by the French Centre for Research on Contemporary China (CEFC) and the Laboratory Techniques, Territories and Societies (LATTS). It is concerned with the financialization of urban production processes in China and India. It sets out to explore, in two highly populated and fast-urbanizing countries, the multifarious forms taken by the circulation of finance capital in the real estate sector, and their effects on the production of the urban built environment. The project takes issue first with the role of property markets in economies that are increasingly interconnected and affected by recurrent global financial crises. It also questions the ways in which urban development in large-scale “emerging” countries is financed. Going past often a-spatial approaches, the project will analyze the specific geographies associated to the growing amount of finance capital invested in the urban built environment. It will discuss both its geographic diffusion and the resulting territorial differentiation processes.
Capital markets deregulation has fuelled the circulation of transnational capital flows at a global scale. The steady economic and urban growth in large-scale “emerging” countries like that of China or India attracts investment in the real estate sector because of its potential profitability. Yet, financial flows are not evenly located but rather follow socialized and spatialized circuits that tend to concentrate investments in financial centres. Institutional arrangements are developed at a local level to attract capital, increase the volume of investments, anchor them in local property development filières and circulate them in systems of secondary cities.
It is acknowledged that finance capital plays a growing role in the production of the built environment. Its impact is all the more visible that it predominantly contributes to the making of large-scale urban objects – office and residential high-rise buildings, multifunctional real estate complexes, large equipments and infrastructure – in mostly large-scale urban regions. Yet, capital markets influence may be more pervasive. The circulation of finance capital may support the adoption of increasingly “neoliberal” policies which attempt to “anchor” mobile capital. It may also reveal the limited capacity of public authorities to regulate the urban and social unbalances resulting from the increased land competition associated to capital flows. Furthermore, the penetration of finance capital in the urban realm may support the diffusion of new norms in the conception of real estate projects and therefore contribute to processes of standardization, thus potentially reshaping the social and material fabric of cities.
The challenges brought by the growing role of finance capital in the making of urban regions in China and in India are related to the demographic size of these two nations - which concentrate over a third of the world population - and by their steady rate of urbanization. These countries will inevitably continue to attract a growing share of finance capital property-related investments to support their urban development. If the so-called “backwardness” of their financial system has preserved them from systemic crises so far, the expansion of financial markets will accelerate the convergence between real estate and finance, and will thus increase these two countries’ exposition to the ups-and-downs of global finance. In return, the financial challenges of China and India’s urban growth will have greater impact on the global economy since a significant share of their economic growth is now related to property markets and land appreciation dynamics. Despite the major economic and political issues at stake, research has not been much involved in these financialization processes. Therefore, their exploration remains a major scientific challenge that the FINURBASIE research project intends to take up.

Project coordination

Natacha Aveline-Dubach (Université)

The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.


LATTS Laboratoire Techniques, Territoires et Sociétés

Help of the ANR 261,358 euros
Beginning and duration of the scientific project: December 2012 - 36 Months

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