China's local land sales plunge nearly 30% in first 2 months

CHINA'S local authorities saw their income from land sales contract almost 30 per cent in the first 2 months of the year, showing how the continued housing slump is directly hurting government finances.

Revenue in January-February from selling the rights to use state-owned land fell 29.5 per cent from a year ago to 792.2 billion yuan (S$169 billion), according to Ministry of Finance data released on Friday (Mar 18).

That's the biggest slump for the period since at least 2015 when comparable data began.

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 the 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 per cent to 4.62 trillion yuan in January-February, outpacing the 7 per cent increase in general budget spending to 3.82 trillion yuan, the ministry said. BLOOMBERG