In the first 8 months of 2026, China’s state-owned land use rights revenue decreased by 28.6% compared to the same period last year, with a significant widening of the decline. Experts attribute this sharp decrease in land use rights revenue to the continued sluggishness in the real estate market, tight funding for real estate developers, reduced willingness to acquire land, adjustments in land supply policies, as well as limitations on urban investment and support from local state-owned enterprises.
According to the Ministry of Finance of the Communist Party of China’s announcement on September 18, 2026, the total revenue from state-owned land use rights transfers in the first eight months of this year amounted to 1.3753 trillion yuan, marking a 28.6% year-on-year decrease.
Unlike the mere 4.7% decrease in land use rights revenue during the first 8 months of 2025, this year’s decline has expanded to 28.6%, approximately 551 billion yuan less, drawing attention from the market.
Data from the National Bureau of Statistics released on September 15 for the period January to August 2026 revealed a downturn in the real estate sector. Real estate development investment decreased by 19.9%, newly built commercial housing sales area dropped by 12.1%, sales value declined by 13.0%, newly started housing construction area plunged by 24.8%, and residential completion area decreased by 25.4%.
In the national real estate market statistics for the January to August period released by the Bureau, except for the year-on-year growth in the signed area of second-hand housing transactions, all other indicators showed declines, reflecting ongoing market challenges.
Experts and industry insiders attribute the substantial drop in land use rights revenue during the first eight months of 2026 to the persistent weakness in real estate demand, compounded by funding constraints for developers, reduced land acquisition intentions, and adjustments in land supply policies.
Professor Xie Tian from the Darla Moore School of Business at the University of South Carolina stated that since the bursting of the real estate bubble, land use rights revenue has been on a continuous decline. He predicted that the downward trend in revenue for the remaining months of this year will further expand, primarily due to the collapse of the real estate market.
Economist Davy J. Wong emphasized that the current situation signifies more than just cyclical decline but a complete failure of the previous fiscal expansion model in the real estate sector.
The reduced land use revenue is also concurrent with a contraction in land transaction volume. Data from the China Index Research Institute shows a decrease in transaction areas across various land types, indicating a dual shrinkage in supply and demand within the land market.
Recent policy changes released by the Ministry of Natural Resources and the National Forestry and Grassland Administration on March 5, 2026, emphasize tying the addition of urban and rural construction land to the activation of existing land resources. Priority for new construction land is to be given to major projects and livelihood projects rather than operational real estate development.
This shift towards activating existing land resources and focusing on significant projects and public welfare appears to limit the reliance of local governments on revenue from newly added residential land.
Sources quoted by economic observers suggest that increased supervision on state-owned enterprises engaging in land acquisitions, combined with stricter approval processes for local land acquisitions, has contributed to the ongoing decline in land revenue.
The challenges faced by the land market in 2026, including the diminished willingness of real estate developers to acquire land, reduced land supply, and policy adjustments, have put pressure on the market, resulting in a double contraction in supply and demand.
Wang Zhenyu, the Director of the Local Finance Research Institute at Liaoning University, stated that China’s entry into the era of existing housing imposes a challenge on the concept of “land finance,” which was a product of the era of flow and increment, leading to the inevitable threat of diminishing marginal returns.
Regarding China’s current economic situation and future trends, Xie Tian pointed out the high levels of local government debt, rising non-performing loans in banks, and the Communist Party’s multiple economic challenges stemming from stagnation, unemployment, and lack of control. The current circumstances indicate that the Party is facing insurmountable obstacles.