<div>
<p>For roughly two decades, China's local governments used the revenue from selling land to property developers to build roads, metro lines and new urban districts, and to cover a large share of their spending. But when the property market slumped, developers began to default and land sales fell sharply, leaving localities with heavy debts and a shrinking source of revenue.</p><p>In this episode of The Sound of Economics, Yuyun Zhan and Alicia García-Herrero welcome Tianlei Huang to discuss the problem. They explore how China’s land finance model helped fund the country’s economic development and why it could not last. With no single source able to replace the vast revenue from land sales, they argue that deep structural reform will be needed to stabilise local government finances.</p><p><strong>Relevant research:</strong></p></div><ul>
<li>Huang, T. (2025) '<a href="https://eastasiaforum.org/2026/10/04/the-fiscal-fallout-from-chinas-property-bust/">The fiscal fallout from China’s property bust</a>', East Asia Forum</li>
<li>García-Herrero, A. (2025) '<a href="https://www.bruegel.org/analysis/ten-challenges-facing-chinas-economy">Ten challenges facing China’s economy</a>', Analysis 25/2025, Bruegel</li>
<li>Huang, T. (2026) '<a href="https://www.piie.com/blogs/realtime-economics/2026/chinas-property-bust-spilling-across-its-borders">China's property bust is spilling across its borders</a>', Blog post, Peterson Institute of International Economics</li>
</ul><div>This episode is part of the ZhōngHuá Mundus series of The Sound of Economics. ZhōngHuá Mundus is a newsletter by Bruegel, bringing you monthly analysis of China in the world, as seen from Europe. <a href="https://bruegel.secure.force.com/events/UpdateAcc?sf=1&s4=1">Sign up now</a> to receive it in your mailbox!</div>

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