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Shenzhen has scrapped incentives for land use that had been in place for years to lure Chinese and foreign investors, and has announced that only productive, land-efficient projects will be welcome.

These are part of a string of new regulations published by the municipal government Thursday, as the city moves to tackle a shortage of land and resources following two decades of red-hot economic development.

"It is the first time Shenzhen has launched such kind of centralized land management system since the special economic zone was established," said Mayor Xu Zongheng at a conference Thursday.

The ultimate purpose of these policies is to make sure land is used efficiently, said Vice Mayor Lu Ruifeng.

According to the new regulations, all land incentives to attract investment, including lower land prices for certain projects, will be canceled from July.

The new rules spell out a fine of 20 percent of the land price if a plot land lies idle for a year after the deadline development. The government will recall the land if it is not developed for two years after the deadline.

This will deal a blow to speculators who buy land only to resell it at prices.

In the next three years, the government will make land for industrial use available by auction only. At present, only land lots for housing and commercial purposes are sold by auction, while industrial land is available by private agreements with the government.

Before an industrial construction project can qualify to take part in the auction, however, it must pass an efficiency appraisal. Low-output projects, which require a large amount of land are unlikely to be approved.

Apartments buildings, hotels and other constructions for non-industrial use will not be allowed to be developed on land lots set aside for industrial purposes.

The government will also reduce land supply in the coming years. In the next four years, only 83 square kilometers of land in the city will be available for industrial or commercial development, at an average of under 21 square kilometers per year. In the last 15 years, about 35 square kilometers of land have been developed annually on average. That annual average figure was 51 square kilometers from 2000 to 2004.

Reserved land lots can only be used for short-term purposes such as parking lots and sports field and are off-limits to permanent constructions before the government earmarks them for development.

The new regulations show the city's efforts to increase average GDP output on limited land resources by carefully monitoring land developments. The government has said the economic growth will not be sustainable if the city fails to rein in wasteful use of land and resources.

"If we don't tighten up land management, more than 90 percent of the city's land will be used up in four years, and the water and electric power consumption will be three times than present," Mayor Xu said at the conference.

"The only solution is carefully planning the use of limited land resources, and boost the average output," he said.

Statistics shows that, currently, the average land output in Shenzhen, measured in terms of GDP per square kilometer, is only 18 percent of that in Singapore and 16 percent of that in Hong Kong.

(Shenzhen Daily June 23, 2006)