Abstract: State-owned land transfer income and local debt income are two important parts of the wider-diameter “land finance”. The empirical study of the panel data from China’s 30 provinces during 2009-2012 shows that these two factors can play a positive role in promoting the local housing prices. The influencing mechanism of the latter is mainly the capitalization of the repayments of debts. This conclusion can provide some enlightenment for China’s housing price regulation as well as the governance of land finance and local debts. Thus, it is suggested to further perfect the financial system of the tax distribution system, to reduce the dependence of local governments on the land finance, to correct the appraisal system with GDP as the core index, to bring the local debt scale and the repaying capacity into the appraisal system, and to strictly control the bond-issuing scale of local governments and normalize their spending orientation under the “new rules” for local government debts.

Key words: land finance; local government debt; housing price level; state-owned land sales