The Guangzhou government’s land sales programme has seized up. Last month the city government in southern China had to cancel or drastically scale back its plans to auction land four times because cash-strapped private developers were nervous about Beijing’s raft of measures to cool property prices.
“The sale of 32 sites was cancelled within two weeks. There has never been a situation like this in the history of Guangzhou,” says Peng Peng, a local academic. In the first nine months of this year, the government collected just Rmb14bn ($2.2bn) in revenues from land sales versus a target for 2011 of Rmb50bn after Rmb45.5bn was raised in 2010.
Land sales typically account for about 40 per cent of local government revenues, which Chinese city and county governments rely on to finance large infrastructure projects. For city governments across China this will translate into larger debts – and consequently fewer railway stations, airports and even opera houses.