Local Chinese Governments Inflated Revenue Data with Fake Land Sales

(p. B6) China’s local government funding problems last year were even worse than most economists thought. At least $12 billion worse.

That is the boost Chinese local governments got to their revenues after a series of fictitious sales of land and other state-owned assets, according to the country’s national audit office. The disclosure means that even the official data, which showed a sharp drop in land sales and local government revenues last year, painted a more positive picture than was accurate.

Around 70 regions inflated their local fiscal revenues by selling state-owned assets and land to themselves, the national auditor said. Since these deals were done between local governments and their own entities, they didn’t actually raise revenue for local governments but simply moved money around.

For the full story, see:

Rebecca Feng and Cao Li. “Local Governments In China Used Fake Deals to Lift Sales.” The Wall Street Journal (Wednesday, June 28, 2023): B6.

(Note: the online version of the story has the date June 27, 2023, and has the title “Chinese Local Governments Used Fake Property Deals to Boost Revenues.”)

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