The National Audit Office (NAO) has started auditing the
collection and use of the fees levied on the transfer of land use
rights in 10 cities in order to better regulate the funds.
Such fees are a major source of income for local
governments.
As the nation's property and real estate markets have heated up,
funds have flowed into local government coffers.
The 10 cities include the four municipalities - Beijing,
Shanghai, Tianjin and Chongqing - as well as six provincial
capitals - Harbin, Hefei, Jinan, Changsha, Guangzhou and
Chengdu.
For various reasons, land transfer fees are not included in
government budgets, though they are still at the disposal of local
officials.
As the trade in land has boomed, income from transfer fees has
come to account for almost half of local financing in recent
years.
But unlike budgeted funds, local governments often do not keep
clear records of how the transfer fees are collected or used.
A communiqu from the Ministry of Land and Resources said that
last year, fees from the transfer of land use rights contributed
about 767 billion yuan (US$100 billion) to local finances.
However, the 21st Century Business Herald quoted Ping Xinqiao, a
Peking University professor, as saying that a more realistic
estimate would be 1 trillion yuan.
The State Council last year ordered all land transfer fees to be
included in government budgets.
The fresh audit is aimed at getting a clear picture of the scale
of land transfers and whether the money collected matches that
amount, the NAO said.
The audit will make sure that all fees are included in
government budgets and sniff out any waste, embezzlement or the
loss of State assets in the collection and use of the money.
Land-related corruption cases brought down a slew of officials
last year. Some of them influenced the land approval or bidding
process or siphoned off money.
Renmin University of China professor Yan Jinming described the
loss of State assets in the form lower land transfer fees as
"worrying".
"Local governments tend to attract investment with preferential
policies like promising much lower land fees for industry, which
has led to huge losses," he said.
"This is because of the investment-driven economy. Economic
performance still decides an official's political future."
On the other hand, local governments earn a lot from inviting
public bidding for land designated for property development, he
said.
Yan said local governments can tamper with their accounting in
order to free up more funds for their use.
(China Daily July 11, 2007)