In 2025, several major cities in China have seen a frequent emergence of “land kings” despite the continuous decline in housing prices. The prices of land transactions have been hitting new highs, sparking discussions and concerns. Experts analyze that local governments are frequently promoting “land kings” to inflate land prices, seemingly to maintain housing prices, but in reality, they are providing financial support to the land finances. However, as the land finances are on the brink of bankruptcy, local governments are deeply entrenched in financial difficulties.
At the beginning of 2025, cities such as Beijing, Tianjin, Hangzhou, and Chengdu have witnessed several instances of “land kings” in land auctions.
On January 24, after 220 rounds of intense bidding, Hangzhou’s Hushu Minsheng Pharmaceutical Factory site was won by Binjiang Group for 5.456 billion yuan, with a floor price of 64,800 yuan per square meter, showing a premium rate of 71.25%. On March 25, Hangzhou’s New Village site at the Olympic Water and Electricity Center went through 72 rounds of competition, ultimately won by Binjiang Group for 5.2 billion yuan, at a floor price of 77,400 yuan per square meter, with a premium rate of 69.86%. On March 28, Hangzhou’s Jiangcun site went through 102 rounds of fierce bidding and was finally acquired by Jianfa Group for 3.434 billion yuan, at a floor price of 88,000 yuan per square meter, with an extremely high premium rate of 115.39%, breaking the record for “land king” in Hangzhou. This premium rate not only set a record of breaking one hundred for the first time in nearly six years but also reached a new high in the Chinese real estate market since lifting price restrictions.
In just three months, Hangzhou’s floor prices have been refreshed three times. Simultaneously, Hangzhou’s floor prices have surpassed Shenzhen for the first time, ranking second only to Shanghai and Beijing.
Similarly, on March 11, Chengdu’s Guixi Street in High-Tech Zone was won by China Merchants Shekou, with a floor price of 31,700 yuan per square meter and a premium rate of 70.4%. On March 27, the Financial City site in Chengdu was acquired by Jianfa Group with a high premium rate of 106% after 213 rounds of bidding, achieving a floor price of 41,200 yuan per square meter, setting the highest record for residential land transactions in Chengdu twice within a month.
For instance, on March 18, China Overseas Land & Investment won the bid for the Shucun site in Beijing’s Haidian District, with a floor price of 102,000 yuan per square meter, refreshing the record for the highest price of residential land transactions in Beijing.
On February 26, Tiandi Construction and Tianjin Binhai Development won the bid for the Shandong Road site in Tianjin’s Heping District, with a floor price of 43,000 yuan per square meter, breaking the record for the highest floor price in Tianjin since 2018.
Data indicates that in the first quarter of this year, Hangzhou and Shanghai’s average premium rates for residential land reached 43.3% and 29.0%, respectively, while Chengdu exceeded 20%. However, despite high premium rates in the aforementioned hot cities, land transactions are still tepid on the overall market level.
The current heating up of the land market may seem like a sign of market recovery on the surface, but it actually hides the traces of collusion between local communist governments and state-owned enterprises in artificially boosting land prices to rescue the finances. Experts suggest that local governments have abolished land price limits (including premium rates), implementing a “highest bidder wins” strategy, while state-owned and central enterprises cooperate in acquiring land at high prices to create the illusion of a real estate market revival, thereby supporting the land finances.
On April 9, Chinese issues expert Wang He, in an interview with Epoch Times, stated that “land kings” are not a result of real estate companies bidding but rather a tactic used by the communist government to stabilize the housing market and raise expectations of price increases. This shift from market-based land transactions to government-led planned behavior fundamentally involves central and state-owned enterprises acquiring land at high prices to channel funds to local finances.
Wang He believes that this financial operation logic of shifting debts from local financing platforms to central state-owned enterprises is merely transferring the debt burden rather than truly reducing it. Ultimately, these debts will still need to be borne either by the government or the banking system. This model is only a temporary expedient measure, revealing the high dependence of local governments on land finances and the financial dilemmas faced by current policies.
This type of land auction operation has become popular in recent years. The specific operation involves state-owned and central enterprises participating in local land auctions with strong financial strength and financing advantages, acquiring land at high prices, thus dominating land auctions in certain cities. After the transactions are completed, the high land transfer fees directly replenish local government finances; the local governments use this income to repay implicit debts or urban investment loans to alleviate debt repayment pressure. Meanwhile, state-owned and central enterprises mortgage the acquired land use rights to banks to obtain loans to offset land acquisition costs. Fundamentally, state-owned and central enterprises are supporting local governments’ borrowing by leveraging their credit.
According to a report from the China Index Research Institute, from January to March 2025, among the top 10 real estate firms in key cities, state-owned, central, and local state-owned enterprises remain major players. For instance, China Resources Land in Hangzhou, Beijing, Shanghai, and Chengdu has entered the top ten land acquisition amounts; China Merchants Shekou, Greentown China, and Jianfa Properties rank in the top ten land acquisition amounts in three cities; Binjiang Group ranks first in the land acquisition amount in Hangzhou.
Official data shows that China’s land transfer revenue amounted to 8.7 trillion yuan in 2021, accounting for over 78% of local general public budget revenue. However, after the burst of the real estate bubble that year, land transfer revenue has been declining, dropping to 4.87 trillion yuan nationwide by 2024, almost halved, dealing a heavy blow to local governments reliant on land finances.
With dwindling land transaction volumes in the market, local governments have had to rely on their controlled urban development investment companies to intervene. These companies accumulate debts by borrowing to purchase land, raising their own debt levels, maintaining operations by relying on refinancing, and sometimes facing liquidity crises, requiring local governments to step in. As this unsustainable model persists, central state-owned enterprises have begun taking on the role of “lender of last resort.”
However, the high-priced land purchase model by central state-owned enterprises is not a long-term solution. Lands acquired at high costs by these enterprises often yield low returns and may even incur losses. If future cash flows prove inadequate, these enterprises will be burdened with huge debts, becoming new risk hotspots. Over time, their balance sheets will gradually resemble urban investment platforms, entering financial predicaments similar to those faced by traditional urban investment platforms.
More importantly, public confidence in the revival of the real estate market has not fully recovered, and the demand for housing continues to shrink. Against the backdrop of ongoing soft real estate prices, the stark contrast between high land prices and low market activity will only deepen the crisis of trust in official propaganda.
On April 10, overseas Chinese issues expert Ji Da, in an interview with Epoch Times, pointed out that the frequent emergence of “land kings” stems from the local communist government’s financial self-rescue, but it relies on the expectation of rising house prices. With current market demand shrinking and residents showing low willingness to purchase homes, high land development costs will exacerbate the risks of debt for central state-owned enterprises.
“The communist government’s strategy of raising land prices seems to be rescuing the housing market, but in reality, it is saving the finances. To truly break away from land finances, there must be economic structural transformations and tax system reform, which inevitably will touch upon the interests closely linked to the land economy, encountering significant resistance. This is a dilemma that the communist government is neither willing to face nor capable of addressing,” says Ji Da.