A photographer walks on an area of prairie in Shanxi province. (Photo/Xinhua)
Some cash-strapped local governments in China are selling land to boost their revenues, which have been affected by the country's economic slowdown, the Shanghai-based First Financial Daily reports.
Nearly 40% of China's province-level regions have not achieved their dual goals of collecting more than 50% of their annual fiscal revenue in the first half of this year, the report said.
Wenzhou, the entrepreneurial hub of Zhejiang province in eastern China, offered to sell 52 plots of land covering 3,220 acres in an auction a few days ago. The sale of such large tracts of land by the government is unprecedented. The auction was definitely not aimed at reducing the city government's debt, since this debt accounted for only 6% of its GDP in 2011.
To avoid an industrial collapse in Wenzhou and enable sustainable economic growth, people from the city have been traveling to other regions in the country to attract investment and promote land sales.
On Aug. 27, the Zhejiang provincial capital of Hangzhou earned 5.4 billion yuan (US$850.5 million) by selling seven plots of land covering 456 acres.
On the same day, Beijing announced that it would begin auctioning 11 plots of land from Sept. 17. The cities of Shijiazhuang in Hebei province and Wuhan in Hubei province have also begun planning land auctions.
Zhang Dawei, head of the research department at Centaline Property Agency in Beijing, said the decline in revenue from land due to the government's policy to cool the property market and strained local government finances are the two main reasons why local governments are promoting land sales.
The central government's revenues climbed to 4.136 trillion yuan (US$651.4 billion) in 2011 from 1.562 trillion (US$246 billion) in 2008, representing an average annual growth of 38.4%, with revenues from land transactions accounting for more than 70% of all revenue.
Data from the country's Ministry of Finance also shows that due to a sharp drop in land transactions, revenue from the transfer of land-use rights fell 27.5% to 1.143 trillion yuan (US$180 billion) in the first half of this year compared to the same period last year.
However, given the rebound in the property market and an increase in the capital reserves of corporations, there have been signs of a land market recovery.