Main photo source: China's Ministry of Finance
China’s local authorities saw their income from land sales contract almost 30% in the first two months of the year, showing how the continued housing slump is directly hurting government finances.
Revenue in Jan.-Feb. from selling the rights to use state-owned land fell 29.5% from a year ago to 792.2 billion yuan ($124 billion), according to Ministry of Finance data released Friday. That’s the biggest slump for the period since at least 2015 when comparable data begins.
China local governments' land sales revenue down 29.5% in Jan.-Feb.
Note: February's figures are combined value in the first two months of each year.
Land is a significant source of income for China’s cash-strapped local authorities. However, revenue growth slowed sharply as home sales in the country started to plunge in the second half of last year, undermining the demand for land from housing developers.
The property market has shown little sign of recovery this year despite local governments measures to encourage home purchases, with housing sales still plummeting and demand for mortgages weakening. For the first time since 2010, the government didn’t include a revenue target for land sales in the annual budget, a recognition of the uncertainty plaguing real-estate markets.
China’s local authorities are under enormous pressure to bolster economic growth in this politically sensitive year, with the central government looking to them to both cut taxes and boost spending, even as income growth moderates. In light of the financial stresses they face, Beijing has promised to transfer more money to the regions, tapping the profits of state agencies and businesses including the central bank.
General fiscal income, which is mainly from tax payments, rose 10.5% to 4.62 trillion yuan in January-February, outpacing the 7% increase in general budget spending to 3.82 trillion yuan, the ministry said.
— With assistance by John Liu, and Fran Wang