State Council initiates audit of land issues

Program will help address malpractices at local govt level

China's State Council will initiate a nationwide audit starting from Monday on the sale, use and management of land, as well as protection of arable land during 2008-13, the Economic Observer newspaper reported over the weekend.

Experts say the audit program will help improve fiscal integrity at the local government level and ensure sufficient supply of the country's arable land.

"The volume of land sales revenue is very big and smaller-scale audits like those did before could not give the central government full understanding of the reality," Ye Qing, deputy director of the Hubei Provincial Bureau of Statistics, told the Global Times Sunday.

According to the report, the National Audit Office (NAO), the State auditor, will dispatch 18 teams at the order of the State Council to oversee the work of the provincial audit teams as they visit the grass-roots units at the county level.

The government organizations to be audited include the fiscal, land and resources, housing and urban-rural development, agricultural and forestry departments, as well as local development and reform commissions.

Back in 2007, the NAO conducted an investigation into the collection, management and use of land sales revenues in 28 counties during the period of 2004-06.

Local government land sales revenue stood at 3.91 trillion yuan ($640 billion) in 2013, according to data from the Ministry of Finance. The figure was 2.67 trillion yuan in 2012.

A rapid increase in land sales revenue indicates a growing reliance of local governments to pay their debts with the income gained from land sales, experts said.

"Land sales constitute the major source of the local government income, especially in third- and fourth-tier cities, accounting for over 70 percent of their income," Chang Qing, a researcher from real estate agency Homelink, told the Global Times Sunday.

And the volume of land sales revenue is still on the rise. The revenue from sales of State-owned land hit 2.11 trillion yuan in the first half of 2014, up 26.3 percent year-on-year, according to the newspaper.

The latest nationwide government debt audit released at the end of 2013 showed that local government liabilities had expanded to around 17.9 trillion yuan at the end of June 2013, an increase of 67 percent from 2010.

The audit will target improper practices of the local governments such as illegally converting agricultural land into construction land, evading necessary administrative procedures and taxes, and avoiding responsibility to pay compensation for acquired agricultural land, the newspaper said.

Moreover, sometimes developers secure land without actually paying the due amount, which causes huge arrears in payment of the land transfer fee, Chang said.

Ye said the audit program will help in fixing problems in rural areas.

"For instance, it will help address the problem of a large number of public protests in rural areas over land use issues," he noted.

Urban land in China is owned by the State, and rural land is normally under collective ownership. Many land use and management issues touch the interests of the rural population.

Moreover, to ensure food security, China has pledged to maintain 1.8 billion mu (120 million hectares) of arable land, considering it a "red line."

Experts said the audit program would also expose more corruption cases related to property development.

Among the 21 municipalities and provinces that have been investigated by the country's anti-corruption watchdog, 20 have been found to have corruption cases related to the real estate sector, the report said.

The notion of a nationwide audit on land sales was first mentioned in the central government work report during China's annual session of the national legislative body in March.

Premier Li Keqiang said in the report that audit in this sector, which attracts substantial social attention, would systematically stem activities such as rent-seeking and corruption.