In the wake of the continued downturn in the Chinese real estate market, local governments are experiencing a significant decrease in land sale revenues. In 2025, the revenue from the transfer of state-owned land use rights by local governments has seen a double-digit decline for the fourth consecutive year. The latest official data shows that in the first two months of this year, revenue from state-owned land transfers has plummeted by 25.2% year-on-year.
On March 19th, the 2026 fiscal revenue and expenditure situation released by the Chinese Communist Party’s Ministry of Finance revealed that in the first two months of this year, the budget revenue of national government funds stood at 536.3 billion yuan, a 16% decrease compared to the same period last year.
When broken down by central and local levels, the budget revenue of national government funds for the central government amounted to 86.2 billion yuan, showing a 6.7% increase year-on-year. On the other hand, local government budget revenue for their own funds reached 450.1 billion yuan, reflecting a significant decrease of 19.2%. Within this, revenue from the transfer of state-owned land use rights was 354.7 billion yuan, marking a 25.2% drop compared to the previous year.
Official Chinese Communist Party statistics often conceal unfavorable situations, suggesting that the actual data may be even worse than reported.
In early February this year, data released by the Ministry of Finance indicated that in 2025, local government budget revenue from state-owned land transfers amounted to 4.1518 trillion yuan, a 14.7% decrease from the previous year. This marks the fourth consecutive year since 2022 that this revenue has experienced a double-digit decline. Compared to the peak revenue of 8.7 trillion yuan in 2021, the revenue from local land transfers in 2025 has decreased by approximately 4.6 trillion yuan, representing a drastic 52.3% decline.
At that time, the official Chinese media outlet “Caijing” quoted the analysis of Luo Zhiheng, Chief Economist at Yuekai Securities, stating that the sluggish Chinese real estate market has led to a continuous decline in local land transfer revenue, increasing the pressure on local government debts.
Luo Zhiheng pointed out that China’s property market has shifted to a scenario of “structural oversupply,” with weak sales putting increased financial pressure on real estate companies. This, in turn, has made developers more conservative in land acquisition and investment, directly impacting land transfer revenue and becoming a critical factor in the tightening finances of local governments.