Chinas Land-Sale Revenue Slump Deepens Despite Rise in Fiscal Income

China’s official fiscal revenue returned to growth in the first half of the year, but a prolonged collapse in land-sale income continued to erode the finances of local governments, highlighting the country’s ongoing property-sector crisis and growing fiscal imbalance.Data released by China’s Ministry of Finance via state media Xinhua News Agency on July 22 showed that revenue from state-owned land-use rights sales—a key source of funding for local governments—fell 31.5 percent year over year to 977.8 billion yuan ($144.4 billion) during the first six months of 2026. The pace of decline accelerated from the first five months of the year, when revenue had fallen 28.7 percent, underscoring continued weakness in the real estate market.Although Beijing reported stronger tax collections overall, China-based analysts told The Epoch Times the gains came largely from stock-market activity and were far too small to offset the sharp loss of land-related revenue that has long underpinned local government finances. They spoke on condition of anonymity out of fear of reprisal.Land Revenue Loss vs. Stock Tax GainsThe Ministry of Finance said general public budget revenue reached 12.1 trillion yuan ($1.79 trillion) in the first half of the year, up 4.7 percent from a year earlier, accelerating from 4 percent growth during the first five months. Tax revenue rose 5.3 percent to 9.79 trillion yuan ($1.49 trillion).Among individual tax categories, securities transaction stamp tax nearly doubled, rising 97.3 percent year over year to 154.9 billion yuan ($22.9 billion). Based on official figures, that represented an increase of about 76.4 billion yuan ($11.3 billion) from the same period last year.By contrast, revenue from land-use rights sales fell by an estimated 449.6 billion yuan ($66.4 billion) from a year earlier—nearly six times the increase in stamp tax collections.Other property-related taxes also weakened. Deed tax, which is collected on property transactions, fell 14.7 percent, while land appreciation tax declined 15.3 percent. Domestic consumption tax also dropped 3.4 percent.Individual income tax rose 13.1 percent, while corporate income tax increased 3.9 percent.Skepticism Over Official Revenue PictureA China-based public finance scholar told The Epoch Times that the official revenue figures do not accurately reflect China’s fiscal conditions.“According to figures circulating within the industry, fiscal revenue increased only about 2 percent during the first five months, yet the official first-half figure is 4.7 percent,” the scholar said.He argued that the surge in securities transaction stamp tax reflects heavy taxation on stock-market trading rather than broader economic strength.“If the stock market declines and trading volume falls, this source of revenue will also shrink,” he said. “The tax income the Chinese Communist Party (CCP) is collecting from stock-market activity is based on an environment that is steadily deteriorating.”The scholar also questioned the official estimate of the land-sales decline.“Some analysts believe the reported 31.5 percent drop in land-use rights sales significantly understates the real decline,” he said. “Researchers at Renmin University have estimated that land-sale revenue may actually have fallen between 50 percent and 65 percent.”Property Slump Continues China’s property market entered a prolonged downturn in 2021, ending years of rapid expansion that had made land sales one of the primary sources of local government revenue.For years, local governments relied on proceeds from selling land-use rights to finance infrastructure projects, repay debt, and maintain public services. As the property market weakened, that funding model has come under increasing strain.Reflecting this continued deterioration, revenue in the government’s fund budget, which includes land-sale income, fell 21.6 percent in the first half of the year.The decline in land transactions has also reduced revenue from deed tax, land appreciation tax, and other taxes tied to real estate development.Although Beijing has spent years discussing reforms to reduce local governments’ dependence on land sales by expanding their tax base, local authorities remain heavily reliant on land revenue, special-purpose bond issuance, and fiscal transfers from the central regime.A Beijing-based financial analyst told The Epoch Times that China’s local governments are scrambling to find alternative sources of revenue after land sales dried up.“Local governments across the country have run out of money,” he said.“Large and medium-sized infrastructure projects have been suspended, while smaller projects have simply been postponed until next year. That doesn’t mean they’ll actually be built.“Many local governments cannot pay procurement bills or construction contractors. The figures reported to higher regime authorities are becoming increasingly unreliable, and the central regime is largely looking the other way because the overall economic situation is in such poor shape.”Fiscal Resources Continue to Shift Toward BeijingThe latest fiscal data also highlighted a widening gap between the finances of the central and local governments.Central government budget revenue rose 7.5 percent in the first half of the year, while revenue retained by local governments increased only 2.7 percent.Central government spending grew 6.5 percent, compared with just 0.6 percent growth in local government spending.China’s overall government expenditures rose 1.5 percent to 14.33 trillion yuan ($2.12 trillion). Spending on social security and employment increased 7.6 percent, while health care spending rose 10.8 percent. Education spending grew only 0.6 percent, and science and technology spending increased 1.3 percent. Expenditures on environmental protection and agriculture both declined.The Ministry of Finance also said local governments issued 2.07 trillion yuan ($310 billion) in new special-purpose bonds during the first half of the year, equivalent to 47 percent of this year’s planned issuance. The ministry said it would accelerate the allocation of those funds while strengthening oversight of borrowing, spending, and repayment.A Chinese economist, surnamed Mei, told The Epoch Times the figures suggest Beijing is retaining a larger share of fiscal resources while providing relatively less support to local governments.“The central government’s revenue and spending are growing much faster than those of local governments,” Mei said. “That indicates fiscal resources are increasingly flowing to the central [regime] rather than back to local authorities.”He warned that local governments, which bear much of the cost of education, health care, social welfare, and maintaining social stability, may increasingly turn to businesses to close their budget gaps.“That will likely mean more tax collection campaigns targeting private companies, more fines, higher administrative fees, and a growing number of miscellaneous levies,” Mei said. “As those pressures increase, tensions between officials and the public are also likely to intensify.”Xue Xiaoguang contributed to this report.