Growth, inflation and labour market all easing
Vicious cycle: falling land sales hitting local government revenues
Deteriorating conditions in China’s residential property sector since mid-2021 has seen new construction activity and land sales decline in year-on-year terms. While the former points to weaker near-term economic growth prospects, the latter is a major concern for local government revenues as many of these authorities are highly dependent on revenue from land sales. The composition of buyers also points to concerns around the longer-term sustainability of local government balance sheets.
For further details, please see the China Economic Update (October 2022)
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