Land strategy on dangerous ground

According to media reports, 11 parcels of land sold recently in Jinan, Shandong Province, for a combined 4.62 billion yuan ($74 million).

Such a hefty sum suggests the extent to which some local governments still lean on land sales proceeds to balance their budgets. Such reliance has been roundly criticized, yet some localities have few other options. Compared with other investment vehicles, land sales are relatively risk free. At the same time, many officials are all too happy to see new projects built on local land, since continued construction is seen as a sign of wise management.

Yet, land sales revenues can only offer temporary fiscal relief. Those who rely on land transfers over the long term risk falling into a vicious cycle of dependence. Land, of course, is a nonrenewable resource, and many places are running short of salable parcels. What's more, many of the structures being built on recently sold plots will likely sit empty indefinitely thanks to softening demand.

Authorities should break their dependency on land sales and look for other strategies to boost their local economies. They should do this by promoting the scientific and rational development of industry. In the end, more economic diversity is needed to keep local growth momentum alive.