this post was submitted on 24 Aug 2025
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Rent going down is simply the function of the real estate value going down. In other words, a symptom of a much deeper problem.
The local government income source is tied to land premium (on average across China, 30% of local government revenue comes from leasing and selling land, and this figure has already dropped from a higher proportion after the implosion of the property market sector in the last couple years), and the fall in revenue makes it much more difficult for the local governments to repay their overhanging debt, and have to cut expenses for the city as they have to spend more of their dwindling pool of income on debt servicing.
You can read the report on China’s land financing 2024 and note that the data was compiled from a year prior. It has gotten worse since then, and I’m still waiting for the publication of their 2025 report (the data already exist, the compilation simply makes it nicer and easier to grasp everything in one go).
The person you’re responding to doesn’t know what they’re talking about, as is typical with many Westerners. Don’t get too hang up on that.