BEIJING (Reuters) – China’s government land sales revenue fell for the 20th consecutive month in August, data from the finance ministry showed on Friday, signalling more pressure on local governments with deepening debt woes.
Land sale revenues fell 22.2% from a year earlier in August, after falling 10.1% the previous month, according to Reuters calculations based on the ministry’s data.
For January-August, sales were down 19.6% from a year earlier to 2.71 trillion yuan ($372.82 billion).
Mounting local government debts are posing major risks to China’s economy and financial stability, following years of over investment in infrastructure and plunging returns from land sales.
“An ongoing decline in land sale values — a key source of revenue for this tier of local and regional governments (LRGs)–could erode the financial strength of this tier of government, and diminish discretionary spending power,” said S&P Global Ratings credit analyst Wenyin Huang.
Beijing has been ramping up measures to tackle local debt risks, including easing restrictions on the property sector and tighter scrutiny of local governments’ financing vehicles, with markets anticipating more fiscal and monetary measures to ensure a real recovery.
($1 = 7.2690 renminbi)
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