This article examines the evolving dynamics of state entrepreneurialism amid the ongoing restructuring of urban governance in China, focusing on the Shenzhen Qianhai Pilot Zone—a flagship area exemplifying China’s latest advances in financial innovation and territorial development. Drawing on on-site observations and interviews with 13 senior officials from the local authority and key enterprises involved in the zone’s development, this study reveals how the local state strategically initiates innovation in land development. Specifically, it has pioneered a unique “build-operate-transfer”-based land lease model, subsequently transforming it into a real estate investment trust (REIT) product. By bypassing traditional land-use-right transfer and introducing a flexible lease, the authority enables private developers to construct, operate, and profit from lease income during the initial development phase. The innovative practices point to the emergence of new state capacities to formulate development trajectories. However, the use of regulation flexibility and a pragmatic approach in policymaking does not signal the dominance of a hands-off development mode; rather, it reflects a strong commitment to realizing the central government’s political objectives. The state can foster entrepreneurial growth while maintaining decisive control over critical factors, balancing policy experimentation with oversight to ensure that innovations align with higher-level political directives and remain fully manageable.
Ling et al. (Fri,) studied this question.