(Yicai Global) Feb. 23 -- Chinese local governments’ revenue from the sale of land-use rights, which accounts for around 90 percent of local governmental funds, should stabilize this year after a bad year in 2022, and could even see marked growth in some areas, an analyst said.

Land-use sales this year across the country will definitely be better than last year, said Wang Zhenyu, head of the local finance research institute of Liaoning University. But the high growth rates would be due to the low base line this year and the absolute value of sales is not likely to be particularly high.

Revenue for governmental funds in China’s 31 provincial-level regions is expected to amount to CNY7.2 trillion (USD1 trillion) this year, a dip of 1.9 percent from the year before, according to Yicai Global research. This would be a huge improvement on the annual plunge of 21.6 percent logged last year due to the sharp downturn in the real estate market.

Twenty-one out of China’s 31 provincial-level regions expect their revenue for governmental funds to grow this year. Tianjin, near Beijing, and northeastern Liaoning province are anticipating revenue to more than double, while the southern province of Guangdong and eastern Shandong province predict single-digit growth.

China’s macro-economy will continue to recover this year and the rolling out of a series of policies to stabilize economic growth will boost people’s confidence as well as their income, so as to lay the foundation for the housing market’s gradual recovery, Luo Zhiheng, chief economist with Yuekai Securities, told Yicai Global.

The land market this year will hopefully stay stable and revenue from land-use sales will also pick up, Luo said. However, this will not become noticeable until the second half, and the situation in the first half still calls for further observation.

In the medium term, revenue from the sale of land-use rights should return to growth as the housing market gradually recovers and stabilizes, Luo said. The days of high leverage and rapid turnover in the real estate sector are over.

Income from the issuance of special bonds, which are also part of local government fund revenue, will stay high at around CNY4 trillion (USD580.8 billion). And this high level of funds will spur investment and help the economy operate within a reasonable range.

Editors: Xu Wei, Kim Taylor