Report by Peking University professor estimates regional governments made over RMB1 trillion selling land this year

21st Century Business Herald

According to 21st Century Business Herald, on the afternoon of Oct. 29th, Peking University China Economy Research Center held a symposium on the economy in the third quarter of this year, Prof. Ping Xinqiao of the Center issued a report that upsets the theory that regional governments do not have sufficient financial power to support their responsibilities.
This report, entitled "The exploding trend of regional fiscal expenditure in China and the cost of public administration," points out that the disposable fiscal ability of regional governments already reached RMB3 trillion in 2004, accounting for 19% of the GDP. Regional governments have sufficient fiscal power to support public projects.
It seems like the theory that central government revenues are growing too fast and regional governments are short of money is seriously askew from the facts. In the past, when calculating regional government revenues, legal extra-budgetary cash accounts have not been included. The so-called "regional governments' small treasury" are mainly revenues made from selling land and collecting administrative fees. According this report, these two extra-budgetary revenue sources brought in RMB615b and RMB432.3b respectively in 2004. If the revenues transferred from the central government to regional governments, estimated at RMB800b, and the budgetary revenues of RMB1.189 trillion, are taken into account, then the regional government's annual disposable fiscal power in 2004 was RMB3,036.7b, 22% of GDP that year.
Therefore, Ping Xinqiao concludes: "Economic resources controlled by regional governments not only increase in absolute volume, but also greatly increase in relative volume. In general, regional governments have no reason to "cry poor." Furthermore, the disposable fiscal power of regional governments is still growing very strongly. According to Prof. Ping's estimate, revenues from land sales alone may exceed RMB1 trillion this year.