Local governments in China are seeking opportunities to expand land supply to relieve their fiscal plight after the central authorities demonstrated their determination to maintain tight property control policies.

A number of local governments, including Beijing, Shijiazhuang in Hebei province and Wenzhou in Zhejiang province, have prepared big packages of new land for sale.

The Ministry of Land and Resources has urged local governments to accelerate land supply in the second half of this year. The total supply of residential land was 47,200 hectares in the first half, which was only 29.6 percent of the planned figure for land sales this year, the ministry said.

The current surge in land sales is mainly because of the deterioration of local governments' fiscal situation, said Zhang Dawei, head of the research department at Hong Kong-based Centaline Property Agency.

He predicted that the land transaction peak of the year may come in September.

Nationwide State-owned land transfer has rebounded since July, data from the China Index Academy showed. In 300 cities, the August residential land supply was as much as the total in the first seven months.

On Monday, the Beijing Land Conciliation and Reserve Center published transfer announcements for 11 pieces of business land. The bidding will start from Sept 17. Beijing will see a land transfer peak next month, analysts said.

In order to restore investor confidence in the property market, the government in Wenzhou introduced 52 land projects covering nearly 215 hectares at a land promotion event held on Sunday.

Those land projects include residential buildings, commercial properties, hospitals and communication facilities.

"The local government aims to attract property investors to activate the property market by offering land at quite low prices," said Zhao Hangsheng, director of the Real Estate Investment Research Institution at Zhejiang University.

Local property developers are also quite confident about the property market.

"We plan to launch two residential blocks in the city for customers from other cities at reasonable prices," said Ding Yi, a developer of luxury homes in Wenzhou.

China has tightened its curbs on the property sector since 2010, when house prices rose beyond the reach of average wage earners.

Affected by the cooling property market in the first seven months of this year, income from the transfer of State-owned land use rights decreased 27.1 by percent year-on-year, according to the Ministry of Finance.

In the first seven months, the total fiscal income of local governments was 3.71 trillion yuan ($588 billion), a year-on-year increase of 13.8 percent, according to the ministry. During the same period last year, local fiscal revenue rose 34.9 percent year-on-year.

In July, total government revenue was 1.07 trillion yuan, up 8.2 percent year-on-year, influenced by the cooling property market, slowing economic growth and the fast drop in industrial companies' profits, said the Ministry of Finance.

The drop in land transfer income, nearly accounting for 50 percent of total government revenue, has led to rapid falls in local fiscal income, said Pan Jiancheng, deputy director of the China Economist Monitoring and Analysis Center.

So far, 13 provinces and cities have launched investment stimulus plans with a total value of around 12.8 trillion yuan, much higher than their local fiscal income, aimed at boosting economic growth.

"Local governments' loan payment capacity is dropping due to decreasing financial resources, which means that much more attention should be paid to risk control," Pan said.

So far, the central government has not given any signals that it would relax the property policy.

The government will continue to "insistently" curb speculative investment, Zhang Ping, head of the National Development and Reform Commission, said in a report delivered at the ongoing bimonthly session of Standing Committee of the National People's Congress, the top legislature.

Minister of Finance Xie Xuren said on Wednesday that China will launch a differentiated housing tax policy, enhance tax collection and management related to house trading and ownership, and curb speculative purchases.

Chinese media predicted that the State Council may approve property tax pilots after this year's Central Economic Working Conference, which is usually held in December. The new tax policy is likely to take effect in 2013, the media reports said.

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