Local govts see 49.4 pct rise in land sale revenue

China's local governments made total revenue of 2.02 trillion yuan ($330 billion) from selling State-owned land from January to July this year, marking a 49.4 percent year-on-year increase, Beijing Daily reported Sunday citing the Ministry of Land and Resources.

The dramatic surge was the result of an increase in land supply, a more robust real estate market and a spike in land prices, the report said, citing Lou Jiwei, the minister of finance.

Lou said a low base of comparison was another factor, as local governments made 1.35 trillion yuan in land sales revenue from January to July last year, down 27.1 percent from 2011.

Zhu Lixu, an analyst with Xiangcai Securities, told the Global Times Sunday that although selling land helps local governments deal with their rising debts from spending on infrastructure construction, it is not a sustainable strategy.

"As a large amount of social resources are being invested in real estate development, China's economic structure will become increasingly distorted," Zhu said.

Tian Yun, editor-in-chief of the Macro China Information Network under the National Development and Reform Commission (NDRC). told the Global Times Sunday that a lot of real estate sales are based on speculation, and demand from homebuyers is in fact not high.

Zhu noted that while real estate developers are reporting good financial results, the companies' stock prices are not surging. "This means that the market is not optimistic about China's economy, as it becomes more and more dependent on the real estate market," he said.

Lou and Xu Shaoshi, head of the NDRC, said at a meeting Wednesday that expanding the trial areas for the property tax pilot scheme will be an important task for the central government in the second half of 2013.

"China needs to disclose government officials' income and impose property tax and inheritance tax in order to crack down on corruption, which contributes to the soaring home prices," Zhu noted.