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June 2, 2017

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China to launch local land reserve bonds

CHINA will roll out local land reserve bonds this year to further unify local governments’ financing behavior, an official statement said yesterday.

The move came after the country banned local governments from borrowing from banks to finance land purchases and preparations for property development last year.

Provincial governments will be allowed to issue local land reserve bonds for their reasonable financing needs, according to the statement, which was jointly issued by the Ministry of Finance and the Ministry of Land and Resources.

By issuing the bonds, authorities will be able to plug leaks in the system of local financing platforms such as fake land transactions and land reserve capital embezzlement, according to officials with the ministries.

Across China, land sales were once a major source of local governments’ fiscal revenue. Land reserves, which were funded through bank loans before 2015, have been effective methods for local governments to stabilize the land market.


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