Moody's on China ... and its hard to find a positive at all in this ...
- Fiscal and debt metrics of Chinese regional and local governments (RLGs) are under pressure from a decline in land sales triggered by the country's economic slowdown
- RLGs' proceeds from land sales - which accounted for 23.8% of their total revenues of RMB17.9 trillion in 2014 - had fallen 34.7% year-on-year to RMB2 trillion in the first three quarters of 2015. This result compares with growth of 3.1% and 45% in 2014 and 2013 respectively.
- Furthermore, national investment growth slowed to 10.3% year-on-year in the first three quarters of 2015, compared with 15.7% in the same period of 2014, partly because of this fall in the proceeds from land sales.
- RLGs are responsible for much of China's infrastructure investment and rely largely on land sales to fund it.
- Moody's does not see a near-term rebound in land sales, while a recent stabilization of the housing market is unlikely to lead to a rapid recovery in land sales, as housing inventory levels remain very high.
(From Moody's report "Falling Land Sales to Weaken Chinese RLGs' Credit Profile" )
