BEIJING, April 22 The amount of loans using land
as collateral in 84 major Chinese cities rose 30.4 percent by
the end of 2013 from a year earlier, the Ministry of Land and
Resources said on Tuesday, underlining potential financial debt
risks in the country.
The loans increased by 1.77 trillion yuan ($284.23
billion)in 2013, bringing the cumulative total outstanding to
7.76 trillion yuan by the end of last year, the ministry said in
a statement on its website, www.mlr.gov.cn
It is common practice for local governments to use land as
collateral to raise money from financial institutions, and many
rely on such revenues to boost their finances. They have
borrowed heavily over the years to pursue investment-driven
growth, but rising bad loans and bond defaults have deepened
concerns over a possible debt crisis.
However, recent signs of cooling in land prices may reduce
the money local governments can borrow and also increase their
default risk. Local governments have a combined public debt of
some $3 trillion, about one-third of the size of China's
Many property developers and businesses also rely on land
collateral to get loans.
Previous figures from the ministry have shown that gains in
residential land prices slowed for the first time in nearly two
years in the first quarter, and are likely to slow further in
the second quarter.
The latest data also showed there were about 403,900
hectares of land being used as collateral in the 84 cities as of
the end of 2013, up 15.8 percent from the end of the previous
($1 = 6.2274 Chinese Yuan)
(Reporting By Xiaoyi Shao and Jonathan Standing; Editing by