Chinese Land Sales Falls Significantly, Deepening Local Government Debt Stress

Chinese government land sales fell significantly through 2021, reversing a six-year streak of gains, as a cash crunch gripped the country’s most indebted developers and worsening local governments’ debt stress. Land sales in 2021 declined over 20 percent on average from a year earlier, with a deeper fall in the main development force of second- and third-tier cities, where sales shrank 25 percent, according to a report released Wednesday by China Real Estate Information Corp (CRIC), which tracks auctions across 300 Chinese cities. Municipal governments in China have been under heavy economic stress, not only exacerbated by dramatic defaults of homebuilders such as Evergrande, but weighted down by sluggish land sales. Land sales account for an estimated one-third of cities’ fiscal revenue, according to S&P Global Ratings. The economy of once coal boomtown Hegang, Harbin Province, has been on the ropes for years. On December 23, officials announced the city has frozen hiring …

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