China’s land sale revenue has plummeted to its lowest level in a decade as the country’s housing market continues its prolonged downturn, forcing the government to increase fiscal spending to stimulate the economy and widening budget deficits in the process.
According to data released by China’s Ministry of Finance on June 20, land sale revenue in May dropped 14.6% year-on-year to 194.1 billion yuan (approximately $27 billion), marking the lowest level since May 2015. This decline contributed to a reduction in total government revenue to 11.2 trillion yuan (approximately $1.6 trillion) for the first five months of this year.
The persistent weakness in land sales highlights the ongoing struggles in China’s real estate sector, which has become one of the primary drags on the country’s economic growth. The situation has been further complicated by increased U.S. export tariffs, adding additional pressure to local government finances and limiting their ability to drive economic growth through expanded investment.
Goldman Sachs economists maintained their forecast that China’s land sale revenue could decline by an additional 5% to 10% this year, noting that real estate construction and investment have yet to reach bottom.
Meanwhile, Chinese authorities are increasing spending at the fastest pace in three years to stimulate economic growth, including providing more subsidies for trade-in programs for consumer goods. Total fiscal expenditure jumped to 14.5 trillion yuan ($2.0 trillion) in the first five months, resulting in an expanded overall budget deficit of 3.3 trillion yuan ($0.46 trillion).
Goldman Sachs analysts predicted that the Chinese government will further expand fiscal spending in the second half of the year to alleviate deflationary pressures in certain sectors and boost market confidence. However, they assessed that while budget adjustments remain possible this year, they are not urgent given that economic growth in the first half is expected to exceed 5%.
Source: Central News Agency (Taiwan), June 24, 2025
https://www.cna.com.tw/news/acn/202506240177.aspx