Caixin
Mar 19, 2022 10:00 AM
WEEKEND LONG READ

Weekend Long Read: Why Land Sales Are Crucial for Local Government Coffers

GDP-based performance assessments have given local officials an incentive to pursue growth by any means necessary. Income from the real estate sector has come in handy. Photo: VCG
GDP-based performance assessments have given local officials an incentive to pursue growth by any means necessary. Income from the real estate sector has come in handy. Photo: VCG

With the rapid development of China’s real estate market, the revenue from land sales has grown rapidly. In the last 20 years, land sales revenue has been an important source of fiscal revenue for local governments.

In 2009, the national revenue from land sales was 1.4 trillion yuan ($219.9 billion), equivalent to 4.1% of GDP. By 2021, the figure had almost doubled to 8.7 trillion yuan, equivalent to 7.6% of GDP. From a broader perspective, revenue from land-use rights, taxes related to the real estate industry, and other land-related earnings form an important part of local fiscal revenue.

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