Charts of the Day: Growth in Land Sales Revenue Slows Sharply

Growth in local governments’ revenue from land sales slowed significantly last year, official data showed Wednesday, the latest sign of a cooling property sector amid a broader economic slowdown.

Local governments received 6.5 trillion yuan ($957.8 billion) in revenue from land sales last year, up 25% from 2017, according to data (link in Chinese) from the Ministry of Finance. The growth rate was 15.7 percentage points lower than the year before.

“Last year, property developers were reluctant to buy land, as (growth in) home sales slowed rapidly,” analysts with Beijing-based Citic Securities Co. Ltd. said in a note. Since local governments haven’t obviously eased restrictions on the property sector, the analysts said they don’t expect growth in the revenue flowing into government-managed funds, which includes revenue from land sales, to accelerate significantly.

General public revenue, which comprises a majority of fiscal revenue, rose 6.2% last year to 18.3 trillion yuan, while spending rose 8.7% to 22.1 trillion yuan, the data show. Revenues from value added tax, corporate income tax and personal income tax made up 95.8% of the general public revenue last year.

In recent months, Beijing has implemented multiple pro-growth policies to help the country weather economic headwinds, including fiscal stimulus measures such as tax cuts and greater infrastructure investment.

“To maintain a proactive fiscal policy in 2019, the budget deficit and the issuance quota for local government bonds are expected to increase,” Citic analysts said.

At the end of last year, China’s outstanding local government debt reached 18.4 trillion, according to data (link in Chinese) from the Ministry of Finance. The central government owed nearly 15 trillion yuan.

As of the end of last year, China’s nationwide government debt was equivalent to 37% of its gross domestic product, lower than other major emerging economies, Hao Lei, an official at the ministry, said Wednesday at a news conference (link in Chinese).

Contact reporter Liu Jiefei ( jiefeiliu@caixin.com)

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