Executive Summary: Key Takeaways on China’s Land Transfer Income Trends
– National land transfer income (土地使用权出让收入) fell 14.7% in 2025 to 4.15 trillion yuan, marking a fourth consecutive year of double-digit decline.
– Significant provincial divergence: 5 provinces including 云南 (Yunnan) and 甘肃 (Gansu) reported growth, while 22 saw declines, with economic powerhouses like 广东 (Guangdong) showing narrowed contraction.
– A shift toward “缩量提质” (volume reduction, quality improvement) is evident, driven by policies promoting “好房子” (good houses) and the strategic revitalization of idle land plots in key cities.
– Budget projections for 2026 indicate a potential stabilization, with provinces like 河北 (Hebei) forecasting growth, but early-year data shows continued pressure, down 25.2% year-on-year for January-February.
– The trajectory of land transfer income remains tightly coupled with the broader real estate market, requiring sustained policy support and fiscal measures to alleviate local government debt pressures.
A Turning Point for Local Government Finance
The health of China’s local government finances is inextricably linked to the fortunes of the real estate sector. As 2025 data on land transfer income rolls in from provinces across the nation, a complex picture emerges—one of continued national decline but with nascent signs of regional resilience and strategic adaptation. This analysis of land transfer income trends is critical for investors gauging the fiscal capacity of local governments, the stability of the property market, and the broader economic implications for Chinese equities. The focus on land transfer income reveals not just a revenue stream under pressure, but a system in the midst of a profound transformation.
According to a report published on April 7 by 粤开证券 (Yuekai Securities), 27 of China’s 31 provincial-level regions have disclosed their 2025 land transfer income figures. The data, compiled from local finance departments, underscores the uneven impact of the property sector’s adjustment. While the aggregate figure points to a significant downturn, the provincial breakdown shows a clear divergence, offering clues to where stabilization might first take root. The evolving dynamics of land transfer income will be a bellwether for fiscal policy and market sentiment throughout 2026.
National Contraction Amid Regional Spots of Growth
The Ministry of Finance (财政部) data paints a stark national picture: 2025 local government land transfer income totaled 4.15 trillion yuan, a year-on-year decrease of 14.7%. This represents a staggering 52.3% drop from the 2021 peak of 8.7 trillion yuan. However, the provincial data curated by Yuekai Securities tells a more nuanced story. Five provinces—云南 (Yunnan), 甘肃 (Gansu), 宁夏 (Ningxia), 新疆 (Xinjiang), and 黑龙江 (Heilongjiang)—managed to achieve positive growth in land transfer income last year.
粤开证券首席经济学家罗志恒 (Luo Zhiheng), chief economist at Yuekai Securities, attributes the outperformance in regions like Yunnan, Gansu, and Ningxia to aggressive efforts by their provincial capital cities to revitalize existing land stock. “The overall land market in 2025 presented a pattern of ‘total volume contraction but structural improvement,'” Luo stated. The persistent downturn in the commercial housing market, combined with tight cash flow among developers and weakened land acquisition appetite, has directly pressured local government revenue from land sales. He anticipates that the decline in land transfer income will continue into 2026, but the rate of decrease is expected to narrow.
Structural Shifts: From Volume to Value
Faced with sustained pressure on real estate demand, local governments have pivoted their strategies. The focus has shifted from sheer volume to optimizing the quality and structure of land supply. This “volume reduction, quality improvement” transformation is a key factor behind the narrowing declines in major economic provinces. Luo Zhiheng (罗志恒) points to 广东 (Guangdong), 浙江 (Zhejiang), and 四川 (Sichuan) as examples where the year-on-year decline in land transfer income has significantly moderated after a period of deep adjustment.
The strategy centers on “存量挖潜” (tapping the potential of existing stock). Localities have made extensive use of newly issued special bonds for land reserve projects to reclaim and repurchase idle land. After better planning and repositioning, these parcels are re-entered into the market, aiming to extract higher value. Data from the Yuekai Securities report shows that among the 22 provinces with declining land transfer income, 12 saw their rate of contraction narrow in 2025. For instance:
– 广东 (Guangdong): Land transfer income fell 11.0%, but the decline narrowed by 17.9 percentage points compared to 2024.
– 浙江 (Zhejiang): Income fell 7.9%, with a contraction narrowing by 19.1 percentage points.
– 四川 (Sichuan): Income fell just 1.1%, a dramatic improvement of 18.4 percentage points.
The “Good Houses” Policy and Premium Land Sales
A significant driver of improved land value in certain cities has been the policy push for “好房子” (good houses). In some first- and second-tier cities, this has translated into increased supply of high-quality residential land with lower plot ratios, which has attracted developer interest and commanded higher premiums. This directly boosts land transfer income for those municipalities. A prime example is 深圳 (Shenzhen), where high-premium residential land transactions, coupled with a substantial increase in industrial land supply, led to a 52% year-on-year surge in the city’s total land transfer income.
Other cities like 成都 (Chengdu), 杭州 (Hangzhou), and 青岛 (Qingdao) have adopted similar tactics, such as increasing the supply of residential land in core urban areas and relaxing plot ratio restrictions. These measures have successfully stimulated the land market. Furthermore, the proactive revitalization of存量土地 (existing land stock) by provincial capitals has been a major growth engine. 昆明 (Kunming) accelerated the utilization of approved but un-supplied land and idle land, increasing the supply of land for infrastructure and public services. This led to a 61.6% growth in the city’s land transfer income, with allocated land revenue soaring 78.8% and accounting for nearly half of the total. In 兰州 (Lanzhou), effective use of special bond funds for land reserves helped revitalize idle resources, pushing the city’s land transfer income up 19.5% and pulling the entire province of Gansu into positive growth territory.
2026 Projections: A Landscape of Growing Divergence
The ongoing real estate market adjustment continues to weigh heavily on local fiscal health. Luo Zhiheng (罗志恒) emphasized to 第一财经 (Yicai) that the deep adjustment of the real estate market directly leads to the continuous decline in local land transfer income, reducing available fiscal resources and increasing local debt repayment pressure. He expects land transfer income to continue falling in 2026, but the decline should moderate. This outlook is reflected in the central and local budget reports for the year.
The State Council’s (国务院) “Report on the Execution of the Central and Local Budgets for 2025 and the Draft Central and Local Budgets for 2026” projects that the nationwide local government-managed fund budget revenue will be approximately 5.26 trillion yuan in 2026, roughly flat compared to 2025. Given that land transfer income constitutes nearly 80% of this fund revenue, a stable projection for the overall fund indirectly signals an official expectation that the steep fall in land transfer income may halt.
Provincial Budgets Reveal Mixed Expectations
A closer look at provincial budget reports reveals significant disparities in local expectations for land transfer income in 2026. Several provinces have forecast growth:– 广东 (Guangdong) expects its land transfer income to reach 253.66 billion yuan, a 5% increase.
– 河南 (Henan) projects its government-managed fund revenue to hit 248.46 billion yuan, a substantial 57% rise.
– 河北 (Hebei) anticipates fund revenue of 224.97 billion yuan, up approximately 22%.
– 江西 (Jiangxi) forecasts fund revenue of 162.45 billion yuan, a modest 2% growth.
Conversely, some provinces are preparing for further declines. The 浙江 (Zhejiang) budget report indicates an expectation for provincial government-managed fund revenue of 491.842 billion yuan in 2026, down 16.2% year-on-year. This divergence underscores the uneven regional recovery and the varying success of local strategies to stabilize their land markets.
Early 2026 Data and the Policy Backdrop
Early indicators for 2026 suggest the market remains under pressure. Ministry of Finance data shows that in the first two months of 2026, local government land transfer income was 354.7 billion yuan, a year-on-year decrease of 25.2%. This contraction is larger than the 15.9% decline in the same period of 2025 and also exceeds the full-year 2025 decline of 14.7%. However, it is crucial to note the inherent lag in this data. There is typically a delay between a developer signing a land transfer contract and the actual funds being deposited into the state treasury. Therefore, the January-February 2026 figures largely reflect land transaction conditions from the second half of 2025. The true trajectory for 2026 land transfer income will become clearer in subsequent months.
The path of land transfer income is inextricably linked to the overall direction of the real estate market. Since the beginning of 2026, authorities from the central government to local levels have continued to roll out policies aimed at stabilizing the property sector. For example, in January, the Ministry of Finance and other departments announced an extension of the personal income tax policy supporting home swaps—originally set to expire at the end of 2025—for another two years until the end of 2027. The People’s Bank of China (中国人民银行) and other regulators have lowered the minimum down payment ratio for commercial housing mortgages to 30%, aiming to support the reduction of inventory in commercial and office real estate markets.
Local Measures and Expert Recommendations
Local governments have also been active, implementing measures to lower home purchase thresholds, optimize公积金 (housing provident fund) policies, increase tax incentives, and offer fiscal subsidies to stimulate demand. Simultaneously, efforts to optimize the housing supply structure continue. Luo Zhiheng (罗志恒) recommends strengthening fiscal support for local governments to regulate land supply at its root. To compensate for the sharp reduction in land transfer income due to the real estate downturn, he suggests the central government increase transfer payments or further raise local government debt quotas. “This will give local governments greater fiscal space, fundamentally control and reduce unnecessary land supply, and vigorously advance the repurchase of idle land stock, thereby reversing the imbalance between market supply and demand,” he advised.
Investment Implications and Forward Guidance
For institutional investors and market analysts, the trends in land transfer income serve as a critical barometer for several key areas. First, the fiscal health of local governments directly impacts their ability to service debt and fund infrastructure projects, which in turn affects regional economic growth prospects and related equity sectors. Second, the stabilization of land transfer income in certain provinces signals potential bottoming in specific regional real estate markets, which could present selective opportunities. The success of policies promoting “good houses” and premium land sales suggests that developers with strong balance sheets and a focus on high-quality projects may be better positioned.
The divergence in provincial outcomes highlights the importance of a granular, region-specific investment approach within Chinese equities. Investors should monitor the monthly land transfer income data releases from the Ministry of Finance and provincial reports closely. Furthermore, tracking the utilization and impact of special bonds for land reserves can provide early signals of successful local market interventions. The overarching theme is one of managed transition—the era of land finance as a relentless growth engine is evolving into a more balanced, quality-focused model.
The journey toward stabilization of land transfer income will be uneven and closely tied to the efficacy of policy support. While headwinds persist, the strategic shifts underway—from volume to value, from new supply to stock revitalization—point to a market gradually finding a new equilibrium. For global investors in Chinese assets, understanding this complex recalibration is essential for navigating the risks and identifying the opportunities that will emerge from this pivotal adjustment in China’s economic landscape.