Income for Local Officials in China Relies on Land, And More Land

October 6, 2011 11:02 pm Last Updated: October 6, 2011 11:12 pm

The reliance of local Chinese Communist Party officials on land revenues has increased more than 300-fold since 1989, according to recently publicized statistics. The phenomenon supports rampant corruption throughout the country, as developers pay off officials, and tenants are evicted so houses can be demolished and new structures built, fueling a cycle which sees an astonishing 20-30 percent increase in local government profits year on year for the last ten years.

Guan Qingyou, an economist, writer, and former researcher at the Center for China Studies, Tsinghua University, compiled statistics showing that land transfer revenues to local officials increased 6,732-fold over 21 years. Commensurately, the percentage of land sales as a portion of local fiscal revenue has increased more than 300-fold.

In a microblog post on Sept. 17
, Guan presented the data in a table showing the revenue increases for the years 1989 through 2010.

According to his table, land transfer fees grew from 447 million yuan (US$70 million) in 1989 to 10.19 billion yuan (US$1.6 billion) in 1991, and soared to 129.6 billion yuan (US$20.33 billion) in 2001. Fees then skyrocketed for the following ten years.

Fees went from 1.2 trillion yuan (US$188.25 billion) in 2007 to 3.01 trillion yuan (US$472.19375 billion) in 2010, which was also a jump of 70 percent over the previous year.

The percentage of land transfer revenue in local fiscal revenue also increased from 0.24 percent in 1989 to 74.14 percent in 2010—a whopping 308-fold increase

Guan noted that all the data comes from official statistics, including the China Statistical Yearbook of Land and Resources, the China Statistical Bulletin of Land and Resources, and the China Statistical Yearbook, from 1989 to 2010.

Local governments have now come to rely on the profits and bribes wrought from land sales, which often entails land grabs from existing residents, enforced by violent means and with inadequate compensation given to residents.

Jiang Debin, a current affairs commentator writing on Red Net, said that the heavy reliance on land revenue will cause a major problem when the housing bubble bursts: local governments will lose their largest source of revenue, potentially triggering bankruptcy and serious social unrest.

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