National Business Daily, a Shanghai based business newspaper, recently reported that local government land sales suffered a major decline in the month of May. According to a report that the China Index Research Institute released, for over 300 cities across China, the number of government land transactions in May declined 45 percent compared to the same period last year. The total sales amount for these transactions fell 38 percent. The total land area accounted for in these transactions fell 49 percent. Experts said that they expect a further decline in the housing market in the coming months. Many government land auctions closed with no deals made or the sales made were at the opening prices. The sales decline occurred across all tiers of Chinese cities regardless of city sizes. In addition to losses in land sales, local governments’ housing related tax income is also seeing a sharp decline. Many local governments in China rely heavily on the housing market for funds for public spending and for providing guarantees to loans to the government. Many economists expressed their worries about government’ debts and called for adjustments to the local industrial structure to create more sources of income.
Source: National Business Daily, June 9, 2014