The real estate industry in China is facing a severe problem. People are not buying and as a result, builders do not want to acquire new land from the government for development either. As a result, the local government’s income has dropped dramatically.
An Internet article listed many numbers to show that, in 2022, many local governments were severely short of money.
The article said that, according to data from the Ministry of Finance, from 2017 to 2021, the proceeds from the land use rights concessions was a significant portion (above 30 percent) of the total local government’s revenue. It had reached 8.4 trillion yuan in 2020 (43.59 percent of their total revenue), 8.7 trillion yuan in 2021 and the percent was 41.81. The local governments depend heavily on land sales.
The article then said that in 2022 the land use rights concessions brought in only 3.4 trillion yuan, a 31 percent drop from the previous years’ amount (Editor’s notes: The number does not match. China.com said the land use rights concessions in 2022 were 6.7 trillion yuan, a 23.3 percent drop from the previous year).
The article then discussed the percent completed of planned land use rights transferred in 2022. Among 22 cities, only four cities completed 100 percent or above. Beijing completed only 36 percent. Changchun City in Jilin Province and Chongqing City only completed 16 percent. They couldn’t complete the goal because builders did not want to take on land.
Changchun City sold only 3 pieces of land in 2022, bringing in 780 million yuan in total. In 2021, the city’s public spending budget was 44 billion yuan and revenue from land use rights concessions was 68 billion yuan. The lack of land sales in 2022 left the city facing a big hole in its public spending.
1. 51.ca, January 19, 2023
2. China.com, January 30, 2023