Income to China’s local governments from land sales dropped 13 percent during 2011 according to statistics from the China Index Academy (part of Soufun.com) and the Ministry of Finance.
Falling land sales revenues may mean less cash for infrastructure
Land sales revenues in 130 cities across China totaled RMB 1.86 trillion yuan in 2011 according to the China Index Academy figures and nationwide land sales revenues in 2010 amounted to RMB 2.9 trillion yuan according to the Ministry of Finance.
Assuming that the two sources are using consistent data, then this means a drop of 13 percent year-on-year.
According to a story on CapitalVue.com, “Transactions of residential land in the 130 cities fell 24 percent year-on-year to 1.24 trillion yuan, while the transaction value of land for business and industrial usage rose 21 percent and 34 percent year-on-year, respectively.
The fall in the land sales revenues resulted from the drop in both transaction volume and transaction price, according to China Index Academy.
Shanghai and Beijing respectively earned 120.5 billion yuan and 105.5 billion yuan from land sales in 2011, down 20.4 percent and 35.8 percent year-on-year. Suzhou, Tianjin, Chongqing and Hangzhou each recorded transaction value of more than 70 billion yuan.
In November, a total of 32 plots of land in Guangzhou, mainly residential land, failed to find buyers.Many economists and market observers have speculated that local governments in China will struggle to meet their obligations due to this revenue shortfall, as many of them have taken on massive debt to finance infrastructure projects such as subways, bridges and other transportation and public building improvements.
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