Experts say local fiscal reserves of potential crisis exceed 4 trillion

The signal that "dangerous" fiscal local governments are selling aggressively means that local revenues are at a crisis.　　Banks are actively lending to local governments, but they are likely to make local debt more and more.　　Interview • Author/Ying Pan Qingshan The decline in profits of state-owned enterprises and the decline of land transaction prices, the two sets of data reflect the hidden crisis of local finance. May 20, the Ministry of Finance released data show that 1 ~ April, the national state-owned enterprises to achieve profits of 323.64 billion yuan, down 32.3%; the National Land and resources department released the "first quarter of 2009, the state of the main urban land Price Analysis Report" shows that the first quarter of the overall level of urban land price of 3189 square meters, the chain fell 1.53%, the increase was significantly lower than the 2008 level, down 3.07%.　　This is the first time since 2004 the national land Price fell.　　These two subjects were originally the main source of local finance, the economic situation worsened, "double drop" followed by the decline in revenue. In the first quarter of this year, the national revenue of 1,464,205,000,000 yuan, compared with the same period last year reduced 132.929 billion yuan, down 8.3%.　　April, the national revenue of 589.715 billion yuan, compared with the same month last year, reduce 92.773 billion yuan, down 13.6%. "Local governments are facing growing financial pressure. State-owned enterprises profit decline, small and medium-sized enterprises do not have signs of warming, revenue decline, only rely on land sales to increase local revenue, which is the local government to maintain economic growth and promote the development of related industries the most effective and direct way. In fact, the relationship between the two is very close, not only local finance, but also the central government revenue will have a significant impact.　　Said a person at the State Council Research Center, who declined to be named. Only in the first quarter of this year, the national revenue plummeted, equivalent to the loss of the 2008 Shanghai Municipal Revenue (240 billion yuan) of One-second more (55%).　　At the same time, the country's fiscal spending has been growing, a sharp increase of 330.418 billion yuan over the same period last year, and the equivalent of an incremental 1.5 Shanghai last year local revenue. Local fiscal decline is not terrible, the terrible is that the local government used "land" in exchange for local revenue of the traditional model, due to the bursting of the housing bubble blocked. Once "land finance" is restricted, local governments will have to borrow.　　The existence of government debt increased the pressure of local financial operation, which led to the inability of local finance to carry out a series of fiscal expenditure policies issued by central and provincial governments.　　Now, the first consideration of local government is to stabilize the real estate market and restore the "land-finance" development model as soon as possible. Financial pressure over the big land market quietly lifted state-owned enterprises decline in profits, local fiscal decline, the local government finally sit down, have extended an olive branch to the property developers.　　It is hoped that the real estate business to activate the land market behind, is the local government anxious to protect growth, increase local revenue. "We cannot measure revenue by past standards. The past fiscal growth rate wasMore than GDP growth is always at a high growth stage. If compared with past fiscal revenues, there will undoubtedly be a lot of pressure on all levels of finance, and when the market is not fully recovered, the current finance is in fact normal. "The National Development and Reform Commission Economic Research Institute researcher Wang Xiaoquan said in an interview, because of fiscal tightening, some places may expand investment, including the activation of the real estate market to protect economic growth, but this will create increased spending, debt increase."　　Economic growth is bound to increase debt, but some are reasonable and others unreasonable. In the context of growth and financial pressure, the economic growth as a top priority, rationality seems to be placed in a secondary position. One of the first signs of recovery is the primary land market, which is most directly related to the local government's economic growth.　　Local financial constraints, to some extent, to leave more room for real estate developers. How much does the land market contribute to local finance? The Ministry of Land and Resources statistics show that 2007 the National land transfer income of nearly 1.3 trillion yuan, of which the transfer of land revenue more than 900 billion yuan. Even 2008 was affected by the housing market downturn, the country's land transfer revenue shrank, but still maintained at a high level of 960 billion yuan.　　This shows that the local government to the land market dependence degree is high. Hangzhou, Zhejiang Province, for example, in the past three years, Hangzhou from the land transfer to obtain more than 100 billion yuan of extrabudgetary revenue. A local developer predicts that the proportion of land income to Hangzhou revenue is about 25%~30%.　　Hangzhou Yuhang 2007 budget income of 3.67 billion yuan, of which real estate tax and real estate related industry tax accounted for 40%, in addition, Yuhang from the land transfer of money to reach 4.85 billion yuan, than the budget income is higher. May 8, "2009 China, Tianjin Urban Land Fair", 95 foreign developers and 128 local developers to participate in the "Rendezvous" seems to bring a glimmer of hope for the Tianjin real estate market.　　In the meantime, Tianjin, a breath launched 37 land, of which the city's six core plots have 24, but also launched a level of development of land and the proposed transfer of land, ask developers to participate in the "Advance application." The real interest of developers is more land, less money. A participant in Tianjin "Rendezvous" developers with "more land, less money, speed to" evaluation of the Tianjin "Rendezvous."　　The local government's intentions are clear, not only to boost land transactions, but also to increase participation in land-level development and urban development, and to provide financial support for urban construction upstream. Tianjin, which urgently needs to revitalize the land market, is just a microcosm.　　Beijing Land Bureau officials said that the first quarter of this year's land transfer revenue less than 10% of the planned task, and this year's task is 30 billion yuan (only last year's 60%, Beijing last year, the land transfer income of about 50.3 billion yuan), two quarter to accelerate push, push well. Jahau agency statistics show that the 2009-year quarter of the capital deal with a total land area of 13590,000 square meters, planning construction area of 1.381 million square meters, the total price of 2.302 billion yuan, and 2008 years compared to the Four seasons, land turnover decreased by 76.2%, planning floor area fell 76.6%, the total price fell 87.3%. Residential Land only 6 transactions in a quarter, the transaction area of only 213,000 square meters, 2008 years of the chain of the Four seasons of residential land sales fell by 93.3%.　　In the first quarter of 2009, the premium rate for land sold in Beijing was only 1.98%. Behind these continuing declines, the local government has finally been unable to sit back. The land market is a good sign first from the land auction. At the end of 2007 and 2008, the National Land auction market has finally reversed. In 2008, the situation of real estate business was also reversed, and many local governments extended their olive branches to property developers.　　And the past developers to find the local government to take a different, this time, the local government initiative to the real estate developers, but is so resolute and enthusiastic. April, the Beijing market in the two quarter to speed up the push, push the policy guidance, the phenomenon of last year is no longer, a few plots have appeared multiple rounds of bidding.　　According to SouFun data, at the beginning of May this year, Shanghai, Kunming, Hefei and other land transactions volume, these local governments have accelerated the pace of the push. The role of local government and developers swap, developers clearly occupy the favorable conditions, the price of land transfer and the past significantly shrink. Taking Fujian province Fuzhou as an example, May 6, the "Earth King", in mid-September 2007 Land auction, was at that time Fujian credit Real Estate Development Co., Ltd. to 904 million yuan "sky-high price" patted, after the two sides to cancel the contract for other reasons.　　After 1.5, the land is sold at 564 million yuan. The government finally decided not to take the sale price of the land as a priority, but to make a smooth shot to enhance market confidence.　　"This is the most fundamental reason Fuzhou would rather lose hundreds of millions of.　　Liu Guangdong, deputy director of the north-FU Real Estate Research Institute, said that in recent years, some local governments in land transactions "cautious" a lot, such as prior to the inquiry, first "find" a good developer and then listed. "In fact, most of the companies that bought the land last year were in ' slow ' development and they were waiting for the government to bail out, and now the opportunity has come. From September 2008 onwards, we have clearly seen the government began to assume the market economy in the ' invisible hand ', and in vigorously ' push the city ', the 2009-year quarter of the real estate market in a significant rebound, and even the rise in prices. Under such circumstances, more and more enterprises ' land dilemma will be automatically solved.　　"The real estate sector eminent persons, the national Real estate Managers union executive director Dai Xinming said." A rise in the financial crisis looms large loans to state-owned enterprises and infrastructure projects, but because of the apparent decline in local government revenues, the future local government's solvency will be greatly threatened, which also means that local debtWill increase, and banks may face more bad debts. Revenue declines are expected to spread.　　News from the Ministry of Finance shows that the state-owned and state-controlled enterprises in the operating income, profits and taxes still fall in the range, but operating income, the realization of the decline in profits gradually narrowed, the tax should be paid monthly chain also increased. It is worth noting that, in contrast to the decline in the profits of state-owned enterprises, loan quotas for state-owned companies continue to rise. In 1 ~ April China's urban fixed assets investment structure, the flow of investment is basically state-owned enterprises, especially state-owned large and medium-sized enterprises and other state-supported projects. Data show that the first 4 months of China's urban fixed asset investment primary growth fastest, up 82.1% year-on-year.　　In the view of the industry, the railway transportation industry investment 96.7 billion yuan, growth 94.2%, non-metallic mining products industry investment 124.5 billion yuan, growth of 58.6%; the two fastest growth. "This drop in a liter is worth noting. A large number of loans to state-owned enterprises and infrastructure projects, but due to the sharp decline in local government revenue, the future local government solvency will be a big threat. To solve the problem of supporting funds, local governments have set up a government-backed financing platform, the main approach is to integrate some government background enterprises, set up a financing platform, and then through the platform to issue debt financing tools for direct financing, the purpose is to solve the implementation of expanding domestic demand, the maintenance of growth in the process of supporting capital problems encountered.　　The State Council research Center said. A local branch of the People's Bank a senior executive told reporters that loans at the local Land reserve centre were the most worrisome, mainly because the land market was not active now. Although the real estate market some signs of good, but can not be the same as before 2007, no one is now afraid to jump to conclusions. The problem is, if the land is not sold, how can the loan be? If the past year is good, the local fiscal money can support, but now the local fiscal revenue has fallen markedly, it is impossible to repay the land reserve center loans, if unable to repay, it is likely to have a large number of bad debts.　　In this round of loans, the local government for infrastructure construction applications for loans are also hidden dangers, and local revenue reduction, how could it be? From the development of recent years, "land finance" has become an important source of local finance, related tax revenue accounted for about 40% of the budget expenditure, land transfer income accounted for about 60% of the extrabudgetary income.　　But this is a kind of unsustainable, market-influenced behavior. In fact, the persistent local government debt is staggering. It's just a crisis that hides the debt as the economy moves up and local revenues rise. Kang, director of the Finance Science Institute of the Ministry of Finance, said that the current total local debt in China is more than 4 trillion yuan, about the equivalent of 2008 GDP of 16.5%, revenue 80.2%, local revenue of 174.6%, of which, direct debt of more than 3 trillion yuan, about the equivalent of 12.9% of GDP, Revenue of 62.7%, local revenue of 136.4%.　　Even if doubled, the number is staggering. When local finances are tight, it means debt will increase and banks may face more bad debts. The Development Research Department of the Bank of Communications earlier on the 1981 ~2007 years of U.S. banking spending and GDP changes in the analysis found that on behalf of the bank's bad debts of the provision of expenditure and GDP there is a significant correlation.　　If GDP growth slows markedly, the bank's bad debts will increase significantly. As far as the Chinese market is concerned, GDP growth slows and banks ' bad debts increase markedly. In the first quarter of this year, the new loans For example, a large number of loans to state-owned enterprises and local governments, but because of the decline in profits of state-owned enterprises, local revenue plummeted, this is the formation of non-performing loans of banks foreshadowing. To get out of the fiscal slump and keep the economy growing, activating the land market is something that local governments are keen on.　　This is evident from the changes in the land market and the local government amnesty developers. "The local government will certainly increase local government debt, and the non-performing assets of banks will increase, but the central authorities will not stand idly by." If there is a resurgence of bad assets, it is possible that, as in the past, the bad assets of the big four banks will be taken over by asset management companies. At present, it is important to protect economic growth.　　"said Bin, a macroeconomic analyst at the state Consulting. Dai Xinming said that the real estate industry from the second half of last year's ups and downs, from "Pillar industry" to "important pillar industry" This change is very able to explain the problem. A bank's loans to the real estate market and other industrial loans are about to run out and last year it was not lent.　　The danger for banks is that loans are not used in small and medium-sized enterprises, which account for 60% of the total economy and 80% per cent of the workforce, while local governments are bound to be constrained in the way that SMEs are not able to develop their income by selling land. The positive sale of the land behind, means that local revenue has come to the crisis, once a large number of local debt, is the state to pay or the bank itself? Banks are not at all comfortable.