China Faces a Severe Fiscal Challenge in 2015

Local governments in some of China’s smallest cities are snapping up an increasing amount of their own land at auctions, in a destructive cycle designed to prop up property prices but which is ravaging their own finances.

Local government financing vehicles in at least one wealthy province, Jiangsu, which borders Shanghai, accounted for more land purchases than property developers did in 2013 — the last year for which data were available — according to research collated by Deutsche Bank.

The data signal that already cash-strapped local governments are switching money from one pocket to another rather than booking real sales.

CNBC

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