Motivated by the tax-sharing system, townships often createtheir own industrial clusters. As the consequence of egalitarianprinciple, each township has been allowed to establish one or twoindustrial clusters, and the township government takes charge ofattracting investment and management. According to interviewswith the township heads, the land in township industrial clustersis usually mixed state-owned and collectively-owned, dependingon the economic strength of the enterprise. If an enterprise is eco-nomically strong enough, it feels state-owned land is more secureand prefers paying a land use rights fee to convert collective landinto state land, for only the latter can be used as a mortgage toobtain bank loans. Similarly, the land for town settlement is mixedstate-owned and collectively-owned.