Xinhua News Agency Publishes 5 Consecutive Commentaries Criticizing Land Finance Corruption for Driving Up Housing Prices

From March 28 to April 1, Xinhua News Agency published “Xinhua Commentaries” for 5 consecutive days, aiming directly at local governments and sharply criticizing the root of the current real estate market——land finance and the high land prices and high housing prices bred by corruption.

After 4 consecutive days of sharp criticism, the Xinhua Commentary published on the 1st titled “How Much Longer Can ‘Land Finance’ Be Sustained” pointed out that “to solve the ‘land finance’ problem, the pressing task is to weaken local ‘generating wealth from land’ impulses through institutional arrangements.” How to curb the impulse? The article suggested, “give local governments more financial support.”

At present, most market participants firmly believe that without increasing local fiscal discretionary power, the situation in which local governments “generate wealth from land” will be difficult to resolve through the word “regulation” alone. Property tax is regarded as the natural choice for increasing local government revenue.

■ Summary of “Xinhua Commentary” viewpoints

April 1, “How Much Longer Can ‘Land Finance’ Be Sustained”: Merely relying on the so-called “operating cities” slogan, through “land acquisition and storage” and high-price auctions, huge profits can be obtained by reselling. What is more, real estate development shows results in the same year and makes a notable “contribution” to GDP. Under such circumstances, how can one expect local governments to take the initiative to control housing prices?

March 31, “Crazy Housing Prices Challenge Land Bidding, Auction and Listing”: From an economic perspective, the existing land bidding, auction and listing belongs to the supply-monopoly and demand-competition type. This model, in which supply monopoly and demand competition coexist, inevitably creates vicious competition among demand-side parties and causes land prices to continue soaring.
March 30, “Resolutely Eliminate the ‘Corruption Cost’ in Housing Prices”: What the real estate industry needs to disclose is not only development costs; all approval stages involved in the development process should also be thoroughly disclosed. Comprehensively squeeze the space for corruption.

March 29, “The Property Market Must Not Become a Speculators' Paradise”: Local governments must change their development thinking and can no longer indulge in the “popularity” and “wealth” brought by real estate speculation.

March 28, “Worries About the Property Market Beneath the Bustling Scene”: A land-selling finance that overdrafts the future determines that the real estate market is difficult to sustain, and it further means that relying on this method to drive economic development is difficult to maintain. According to Xinhua News Agency, Oriental Morning Post