Jiangsu launches new land use policy

Local governments at all levels in East China's Jiangsu Province will not be allowed to acquire and sell land by themselves starting from October 1, the provincial government said Tuesday. In future, they will first have to get approval from the provincial land and resources authorities.

The move is aimed at strengthening regulations for land use and preventing financial risks, according to a statement published on the provincial government's website.

Under the new policy, a total of 91 land holding institutions in the province will be qualified to raise loans from commercial financial institutions, and the loans should only be spent on acquiring land, the statement said.

The annual financing quota for the 91 land holding institutions will be decided by the provincial finance authority and will depend on their debt levels. They will not be allowed to raise finance before paying off overdue debt, or raise funds beyond the quota, the statement said.

The policy is the first of its kind in the country, the statement noted.

The policy comes at a time when the National Audit Office is conducting a nationwide audit of local government debt.

Reuters reported in July that there were particular concerns about debt levels in Jiangsu, because of its rampant fundraising through bonds and investment trusts. But Liu Handong, head of the provincial finance department, said Jiangsu's debt level is lower than the international warning line, people.com.cn reported on September 2.

The Ministry of Land and Resources warned in July that given growing difficulties faced by certain local governments in paying off their debt, authorities should curb risks from land management and debt from land financing.

"Many local governments in Jiangsu have mainly depended on land sales to pay off their debt, which is not healthy for sustainable economic development," Hu Zhigang, deputy head of the China Real Estate and Housing Research Association, told the Xinhua News Agency Tuesday.

"The policy will limit local governments' rights, as their excessive land development activities have led to a waste of land resources and the emergence of ghost towns," Zhang Hongwei, research director of Shanghai-based property consultancy ToSpur, told the Global Times Tuesday.

Yang Hongxu, vice president of the Shanghai-based E-house China R&D Institute, said other provincial governments are unlikely to follow Jiangsu's step.

"After all, reducing the number of administrative procedures and streamlining approval processes has been a trend since China's new leadership took office," he told the Global Times Tuesday.

Yang also noted that the policy is not likely to boost local land prices and housing prices.

"The policy may slow down local governments' land sales activities, but will not lead to a land supply shortage," he said, as it is still up to the land authorities to decide local land supply quota.