On June 24th, the Chinese Ministry of Finance released the financial situation for May 2024, showing a 14% year-on-year decrease in land transfer revenue in local government funds for the first five months of this year. This decline widened by 3.6 percentage points compared to the previous four months, indicating a continued slump in land sales revenue for local governments.
In the first five months of this year, the revenue from the transfer of state-owned land use rights (land transfer revenue) in local government funds of the Communist Party of China amounted to 1.281 trillion yuan, and the decline continued to expand.
Furthermore, in May, the month-on-month decrease in land transfer revenue continued to widen, with a 27.4% year-on-year drop.
Looking at specific provinces, data from the Yunnan Provincial Department of Finance showed that in the first five months of this year, Yunnan’s revenue from the transfer of state-owned land use rights reached 11.49 billion yuan, a 22.5% year-on-year decrease, which was 6.6 percentage points higher than the decline in the previous four months.
According to the data from the Jilin Provincial Department of Finance, the local land transfer revenue for the first five months of this year was 6.29 billion yuan, down by 36.5% compared to the same period last year.
The data from the Hainan Provincial Department of Finance indicated that the revenue from local government funds, mainly from land transfer revenue, was around 9.11 billion yuan in the first five months of this year, a 12.4% decrease year-on-year, which was largely consistent with the decline in the previous four months.
Additionally, according to data from the Guangzhou Securities Research Institute, out of the 30 provinces in the first five months, 26 provinces experienced negative growth in land transfer transaction prices (which differs from the revenue calculation mentioned earlier, including land auctions and agreement transfer revenue paid in installments). Among them, 15 provinces saw a year-on-year decline of more than 30%, with Guangdong (-57.5%), Sichuan (-42.7%), and Jiangsu (-42.6%) experiencing significant declines.
In response to this, Luo Zhiheng, chief economist of Guangzhou Securities, told “China’s First Financial Daily” that the stagnant land market is expected to lead to a further decline in land fiscal revenue in 2024. It is projected that the national fiscal land transfer revenue in 2024 will be around 4.7 trillion yuan, decreasing by approximately 1.1 trillion yuan, representing a 19.0% year-on-year decrease. The continuous decline in local land transfer revenue is mainly attributed to the sustained downturn in the real estate market in recent years, tight funding for developers, and insufficient willingness among residents to purchase properties, leading to a simultaneous drop in the quantity and price of local land transfers.