Click on the blue word to follow us
China's land policy is unique and unique in the world.
Because China is the only country in all countries that maintains public ownership of land. It is clear that land on the mainland is owned by the state, and individuals or collectives can only obtain the right to use it and not ownership. In other words, the state land is owned by the government.
No matter what kind of infrastructure or public services, investment in social infrastructure requires a large-scale source of funding. In general, such funds come from "primitive accumulation". For example, the West accumulates capital through economic colonization or war, which is then used for national development.
It should be said that the "primitive accumulation" of almost every developed country is full of flesh and blood original sin. It is almost impossible to obtain a large amount of funds for national operation, local development, infrastructure construction, and social welfare stability in a short period of time. If it is forcibly accumulated, it will definitely lead to social unrest. Thus, predatory capital accumulation is the original relay established by most developed countries.
However, after the founding of New China, there were no conditions for foreign aggression and expansion to obtain primitive accumulation, and the central finances were once very tight, so they did not use the tax-sharing system reform. The central government took away a large amount of local finances, forming a fiscal centralization, which also led to local governments assuming most of the public expenditure functions and finding that the taxes they could collect were not enough. Therefore, local governments obtain tax profits through land expropriation and development and land transfer, which also forms land finance.
Land finance is a good way out for China, just as oil and gas revenue is for Russia, and it is another major source of government disposable finance in addition to tax revenue.
Income from land sales has become an important source of local financial resources for many years.
Take the income from land purchases in the last 5 years (2017-2021).
The four cities of Hangzhou, Shanghai and Beijing exceeded one trillion yuan; guangzhou, Nanjing, Wuhan, Chengdu, Tianjin, Suzhou and Chongqing exceeded 500 billion yuan; And Foshan, Zhengzhou, Ningbo, Shenzhen, Xi'an, Jinan, Qingdao, Fuzhou and other places exceeded 300 billion yuan.
Among them, Hangzhou ranks first in the country with a total land sales of 1.3 trillion yuan, more than the four first-tier cities, and the income from land sales is more than 3 times that of Shenzhen.
The increase in land sales income in Hangzhou is related to the Asian Games and the transformation of urban villages in new and old communities, the opening of the property market, and is related to the Asian Games, the transformation of urban villages and shed reforms, and the high heat of the property market.
It is not that land finance is necessarily a good thing, but land finance, as a major source of income to support the operation of the domestic economy, also has its positive side.
If it were not for land finance, there would be no urbanization in China today, there would be no such a large number of infrastructure construction, and there would be no industrial production sites with high quality and low prices today.
Thanks to the large number of fast-moving financing projects under the land finance, local governments can immediately implement a large number of tax breaks and land price subsidies. The scale and scope of its subsidies are so large that the entire super high tax rate is not so high.
The Black Gold Empire
It is precisely because the subsidies of local governments are much greater than the growth of the tax burden that enterprises have a lot of vitality, and the reason why the central government can maintain such a high tax growth is largely dependent on the higher land yields of local governments.
Without the subsidy of "land finance", enterprises simply cannot afford such heavy taxes, and the high tax rates of the central government are unsustainable. In this sense, the high land price supports the existence and expenditure of local governments, and enables urban development, enterprises can compete for development, and the government finally achieves another income in addition to taxation by recovering the spilled land price, forming a circular economic development ecological niche based on land finance.
In the history of mankind, there has never been such an amazing scene, no need to accumulate foreign wars, no need to carry out colonial invasion and marketing, only rely on the income brought by "land finance", and local governments that do not have a large amount of tax revenue have not only not declined, but have risen rapidly.
Urban infrastructure not only gradually pays off the deficit in the government's ledger, but also has advanced facilities construction, such as high-speed rail, airports, etc. In China, hundreds of cities have taken off overnight. It is even more amazing than the rise of the Four Asian Tigers in those years.
Land finance plays a big role, but hidden dangers have also been buried.
As a temporary accumulation, land finance has played an important and positive role in China's development path, but it is somewhat insufficient for subsequent national development planning and roads.
Although we all know that land finance is the main revenue of the government, and it also has a positive effect. Land finance and the real estate industry cannot be generalized. But the real estate industry and land finance are inseparable at all.
The increasingly high housing prices have also made today's young people more and more flat. Emptied six pockets to pay off the mortgage for thirty years, and such a thing is not said once or twice.
But it is also said again and again
Every time it goes, it goes unsolved.
Do you really not want to solve it? Not really.
In fact, they are all struggling with this problem, the house price is so high, the cost of living is so high, and the natural fertility rate will decline. And relatively speaking, the money is taken to buy a house, the spending power has declined, for ordinary people and the government, it is hoped that the house price will not rise at least.
Capital through the purchase of new land to build real estate industry, naturally also want these real estate to appreciate, buyers also hope to appreciate the investment in their hands, as long as the real estate investment income profits do not decline, capital will continue to enter the real estate market, and raise land prices.
The same land finance will also widen the gap between the rich and the poor, not only the government through the land finance to obtain a large amount of income, enterprises and individuals also through the purchase of land use rights to quickly accumulate wealth. Relying on investment in real estate and other real estate industries, a generation has completed several generations of huge wealth income in a short period of time, and residents who own real estate will have a steady increase in income even if they do not need to work. Residents who do not own real estate, even if they have worked for a lifetime, are difficult to hope for. The faster house prices rise, the greater the gap between rich and poor. Real estate, like stocks, automatically distributes the incremental wealth of society.
Shanghai Tomson Yipin even said: "The average price of 150,000 yuan / square meter is a reasonable price." "Now the house price of Tomson products is even more than 500,000 / square meter." And many people are actually still collecting camps for a down payment of 500,000 yuan. The class solidification in social development has thus reached an insurmountable peak through the accumulation of real estate.
In addition, in terms of the benefits brought by land finance, the more local finances the government obtains for the sale of land use rights, the more dependent it will be on the benefits brought by land finance, rather than on tax revenues. So once there is a real estate bubble, it is a very fierce blow to local finances.
By relying too much on land finance, local governments will relax their planning for enterprise development and enterprises, which will lead to the inability to make domestic economic and social development more favorable. And the huge interests of land sales have also spawned a lot of chaos, such as forced demolition and corruption.
Unlike the gold standard and stock investment, the investment environment that uses real estate as the basis for credit will exceed the actual demand to create a large number of "ghost buildings" or even "ghost towns" with only credit value but no real consumer demand, such as empty cities such as Hegang.
A large number of land resources are occupied by real estate, resulting in uncoordinated domestic economy and uncoordinated use of industrial development.
"Land finance" is a double-edged sword, and the initial primitive accumulation in China is inseparable from land finance, but it also lays hidden dangers for the development of local finance.
China's land policy determines that the government is the sole holder of land. In the process of China's first round of urbanization, the land finance system played a role in promoting the development of the city and solved the government's need for funds in social construction.
In the future, land finance will slowly tend to taxation or real estate tax for a long time, etc., can not say that land finance will disappear, in the development of society, land finance should gradually determine the development positioning, slowly eliminate these hidden dangers, the next ten years land finance situation should be fundamentally changed.
Industry News | Engineering Consulting | Curate reports
Qianrong Engineering Consulting
WeChat public account: engineering consulting and exchange