How to Transition After the End of Land Finance

The article itself covers only two points. The first is that local dependence on land finance averages around 35%, with some areas nearing 50%. Over the past couple of years, land finance revenue has dropped sharply, declining by an average of 25% annually. This signals the end of the land finance era, making it inevitable to replace it with higher direct taxes (such as personal income tax and property tax). The second point—where the real thinking lies—is that the recent surge in state-owned enterprises (SOEs) under the "China Valuation" theme, along with intensified anti-corruption efforts (beyond the previously mentioned centralization of power), likely reflects a capital-market approach to improve SOE operational efficiency as a way to offset fiscal shortfalls. Finally, the government aims to enhance the business environment for private enterprises so they can drive employment and tax revenue. (Employment conditions may not improve significantly, but policy support for businesses is likely to be favorable.)

Real Estate Downcycle: Which City's Fiscal Revenue Is Most Affected?