(Yicai) May 22 -- Chinese local governments’ income from the sale of rights to develop state-owned land, which accounts for about 90 percent of their funding, fell 21 percent last month amid the property market downturn.

Revenue from the sales was CNY238.9 billion (USD33 billion) in April, according to data released by the Ministry of Finance. In the first four months of the year, sales fell 10.4 percent to CNY1.1 trillion (USD152 billion) from a year earlier.

Local authority funds may edge up 0.1 percent this year from 2023, ending years of decline, according to the budget projections for the central and local governments released earlier this year. But drawing a line under the decline in income from sales of land-use rights remains a pressing challenge.

The MOF's data may lag as the government allows property developers to pay half the purchase price within a year. Figures from market institutions can better reflect land market trading, but they also show a downturn trend.

Since the government allows property developers to pay half of the land purchase price within a year, there is a lag in the finance ministry’s data on income from the land transfers. The figures compiled by other organizations can be a better guide, but they also show a downturn.

Land sale revenue fell 1.1 percent to about CNY668.3 billion in the four months ended April 30 from a year ago, according to the Zhongtai Securities Institute for Financial Studies. The figure sank about 39 percent last month, extending the decline from previous months.

Such revenue will continue to decline in the near future, Luo Zhiheng, chief macroeconomic analyst at Yuekai Securities, told Yicai. But the falloff will likely end in the second half, as demand in the property sector may increase on the back of recent new policy support from the central and local governments, Luo added.

It remains to be seen whether these policies can help steady the income from land-use rights sales this year, said Zhao Wei, chief economist at Sinolink Securities. There is also a certain correlation between revenue from these sales and government spending, Zhao noted, adding that only if this income is stable can expenditure rebound.

The government’s fiscal expenditure fell 20 percent year on year to CNY2.2 trillion in the first four months, according to the ministry’s data.

It could jump 18.6 percent to CNY12 trillion (USD1.7 trillion) this year, according to official budget forecasts. That growth is mainly premised on halting the decline in revenue from land sales and the issuance of CNY1 trillion of ultra-long special treasury bonds this year.

Editors: Tang Shihua, Martin Kadiev