Land-sales, A Core Sector of CCP’s Economy About to Collapse

Translated by MOS Finance Team – Leah

After the implementation of the so-called reform of “dividing-the-taxation-rights”, the central government of China has captured the largest proportion of tax revenue, and the land-sales economy has become the largest source of income for local governments. All of these factors along with corruption on all levels of authorities from local to central, the real estate bubble has grown bigger and bigger. Until recently, the Chinese Communist Party’s economy had maintained its illusory growth for a long time through the ridiculous real estate expansion, synonymous to a Ponzi game.

Empty buildings seen on newly developed land in China.

The latest statistics shows that urban land selling auctions are becoming less appealing than before. In the first round of auctions from March to June this year, many real estate developers were unable to participate due to financial difficulties, resulting in a sharp drop in demand for land. In the second round of auctions from June to October of 2021, 40% land lots remained unsold due to lack of bids nationwide.

Since last summer, CCP’s regulators have tightened the policy to restrict the loan terms for private real estate developers, hence make it even hard if not impossible to bid at the land auctions due to no backing of bank loans. All are glaring warnings that the CCP’s real estate market, which had been serving as the “pillar” industry, now finally coming to an inevitable meltdown.

References: China’s land sales market is collapsing

Proofread and edited by: RD16
Posted by: RD16

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