Before the special debt was collected and stored anywhere, the financing method of land collection and storage in China was mainly to reserve land as collateral assets and borrow money from commercial banks and other financial institutions through land reserve institutions. However, land reserve is inextricably linked with primary land development and platform financing, and even becomes the source of hidden debts of local governments. Therefore, in recent years, China's local government financing system has undergone two important adjustments, and the birth of land reserve special bonds occurred under the above background.
(1) Two major adjustments to the financing mode of land purchasing and storage. First, improve the management of land purchasing and storage functional departments, manage one county and one directory, and divest the land purchasing and storage function of urban investment platform. In April of 20001year, China began to require qualified local governments to try out the system of purchasing and reserving construction land. By June 2007, 1 1, the Ministry of Land and Resources, the Ministry of Finance and the People's Bank of China issued the Measures for the Administration of Land Reserve (Guo Tu Zi Fa [2007] No.277), which formally established the status of land reserve institutions as the main body of land reserve work. However, at the beginning of the implementation of the system, the establishment and management of land storage institutions in various places were chaotic. In many places, there were many land storage institutions, and land storage and land development were chaotic. In order to standardize management, the Ministry of Land and Resources issued the target notice of "two reforms and one reform" in September, 20 10, explicitly requiring that land reserve institutions must be completely decoupled from their affiliated and affiliated institutions engaged in land development-related business before the end of March, 2010, and local land and resources departments and affiliated enterprises and institutions shall not directly engage in land primary market development. 20 12 the Ministry of land and resources, the Ministry of finance, the people's bank of China and the China banking regulatory commission jointly issued a notice, proposing to establish a list of land reserve institutions and strengthen the management of land reserve institutions. On February 20 16, the four ministries and commissions issued the Notice on Standardizing Land Reserve and Fund Management (Caizong [2065438+06] No.4), further standardizing land reserve institutions, stipulating that in principle, only one land reserve institution can be established in each legal administrative division above the county level (including the county level), and requiring that land reserve work can only be managed by land reserve institutions and various urban investment companies. After Circular No.4, local financing platforms were officially stripped of their land reserve functions, and reserve centers were set up in various places as directory units of land reserve institutions. At present, there are more than 2,000 land reserve institutions in China.
The second is to standardize the management of land purchasing and storage financing funds, which are earmarked for special purposes and may not borrow loans from financial institutions. Before 20 15, a large amount of funds needed for land reserve financing mainly came from bank loans. According to the provisions of the Measures for the Administration of Land Reserve in 2007, land reserve institutions can apply for secured loans from banks and other financial institutions, but land reserve loans must be earmarked and closed for management, and shall not be misappropriated. Since land reserve loans cannot be directly used to expand urban infrastructure, local governments began to bypass land reserve institutions through financing platforms, acquire land at low cost and then mortgage loans from banks for various local projects, which aggravated the hidden debt risk of the government. In order to prevent local government debt risks, in September 20 14, the State Council issued the Opinions on Strengthening Local Government Debt Management (Guo Fa [2065438+04] No.43) to strictly regulate local government financing. The new budget law of 20 15 stipulates that issuing bonds is the only legal form for local governments to borrow debts. Subsequently, in 20 16, the Ministry of Finance, the Ministry of Land and Resources, the Central Bank and the China Banking Regulatory Commission issued the Notice on Standardizing Land Reserve and Fund Management (Caizong [2065438+06] No.4), which clearly stipulated that land reserve institutions should not borrow land reserve loans from banking financial institutions, and land reserve institutions with land reserve financing needs should raise funds by issuing local government bonds. 20 17 The Ministry of Land and Resources of the Ministry of Finance issued the Measures for the Administration of Local Government Land Reserve Special Bonds (Trial) No.62, which clearly stipulated the issuer, source of debt repayment funds, quota management, issuance mechanism, supervision and management of land reserve special bonds. Since then, special bonds have become the only source of land reserve financing, and also officially opened the "front door" of land reserve financing.
(II) The "front door" of land purchasing and storage-Introduction of special bonds for land purchasing and storage In 20 17, the Beijing municipal government issued the first batch of special bonds for land purchasing and storage, and special bonds for land purchasing and storage in various places appeared one after another. Land reserve special bonds mainly have the following characteristics:
1. The issuer is the provincial government. City and county governments issue land reserve special bonds, which need to be issued by the provincial government and lent to the city and county governments. The issuer of urban investment bonds is a local investment and financing platform, which is essentially a corporate bond.
2. Management of issuance scale limit. Land reserve special bonds are included in the management of local government special debt limit. Compared with the financing methods that are not included in the budget, such as local governments using financing platforms to borrow money, special bonds for land reserve are more conducive to the control and embodiment of government debt.
3. earmarking. The issuance and use of land reserve special bonds strictly correspond to projects, and land reserve funds are used by land reserve institutions to prevent misappropriation and abuse. However, bonds issued by local governments through financing platforms are widely used, and there are loopholes that are divorced from budget and supervision.
4. Project income financing is self-balanced. The land transfer income of land reserve projects that issue land reserve special bonds has a stable source of debt repayment funds, realizing the balance between project income and financing. However, the repayment of other government financing platforms has implicit government guarantee, which is likely to cause greater financial burden to the government.
5. The highest credit rating is AAA. The debt repayment fund of the special bond for land reserve comes from the land transfer income of the corresponding project, which has a high degree of protection and low default risk. At the same time, the main issuer is the provincial government, and the credit evaluation of land reserve special bonds is the highest AAA level; However, the credit ratings of urban investment bonds issued by local governments using financing platforms vary greatly, ranging from A- 1 to AAA.
6. The government has the responsibility to pay. The name of the special bond for land reserve is "Special bond for land reserve of XX province, autonomous region and municipality directly under the Central Government (at the same level or XX city and county)-Special bond for government of XX province, autonomous region and municipality directly under the Central Government (X period)", and the responsibility for bond repayment and fund management corresponds to specific cities and counties. For urban investment bonds, the new debts of financing platforms after 20 14 are no longer government debts, and local governments can no longer provide guarantees or repayment commitments.
7. Tax incentives. According to 20 15 Interim Measures for the Administration of Issuance of Special Bonds of Local Governments, special bonds of local governments are exempt from enterprise income tax and personal income tax. Other financing platforms do not have this discount.
8. Pilot life cycle risk management. On June 2 1 day, the Ministry of Finance and the Ministry of Natural Resources proposed in the Measures for Budget Management of Land Reserve Projects (Trial) that life cycle budget management should be implemented in the field of land reserve on a pilot basis. To build a life cycle management system for local special bonds and projects, it is necessary to divide the projects into life cycle stages, and comprehensively implement risk control measures from the aspects of preparation, construction management, operation management, asset management, fund management, information disclosure, legal responsibility, etc. of special bonds to ensure that the overall risks of the projects can be controlled.
It can be seen that the land reserve special bond system can more clearly measure the debt scale that local governments can bear and the degree of debt protection by local government land assets, and curb local governments and financing platforms from using reserved land to raise funds in violation of regulations in disguise.
Development status and characteristics of special bonds for land reserve from mid-July of 20 17 to June of 20 19, a total of 449 special bonds for land reserve were issued nationwide, with a total amount of12,690.08 billion yuan, showing the following characteristics:
First, the issuance scale has grown rapidly, becoming the main variety of local government special bonds. The first batch of special bonds for land reserve, also the earliest special bonds for local government project income, was issued by the Beijing Municipal Government in July 20 17, involving five bonds in Chaoyang District, Dongcheng District, Shijingshan District and Daxing District, with a total issuance of 9 billion yuan. Since then, under the guidance of the central policy, the number and scale of special bonds for local government land purchasing and storage have increased rapidly. At present, among the 770 special bonds issued by local governments in China, there are only 449 special bonds for land reserve, accounting for 58.3 1%, followed by special bonds for shantytown renovation 186, accounting for 24. 16%. From the issue denomination, the total amount of land reserve special bonds issued is 1269008 billion yuan, accounting for 56.02% of all project income bonds, and it is the most important project income special bonds of local governments.
Chart 1: proportion of special bonds issued for land reserve (as of the first half of 20 19)
Source: Wind, such as Institute of Finance.
Chart 2: Proportion of face value of special bonds for land reserve (as of the first half of 20 19)
Source: Wind, such as Institute of Finance.
Second, from the issue period, it is mainly five years. According to 20 17 "measures for the administration of local government land reserve special bonds (for trial implementation)", the term of land reserve special bonds should be adapted to the term of land reserve projects, and in principle it should not exceed 5 years. In the actual issuance process, there are four periods of 3 years, 5 years, 7 years and 10 year, and the number of land reserve bonds issued is 57, 383, 6 and 3 respectively. Due to the consideration of land purchasing and storage cycle, there are few special bonds for land reserve with a term of more than five years, such as 20 19 (Phase I) special bonds for land reserve in Xinjiang Uygur Autonomous Region (Xinjiang Production and Construction Corps). The land reserve project of Tianshan Road South, the eighth division of Xinjiang Production and Construction Corps, has a calculation period of 10 year, a construction period of 1 year and a land transfer operation period of 9 years, so bonds are issued. Most special bonds for land reserve are mainly five-year bonds, accounting for 85.30%, and the average issuance period is 4.8 1 year, which is lower than other special bonds for project income.
Chart 3: Comparison of the average issuance period of special bonds for project income
Source: Wind, such as Institute of Finance.
Third, from the perspective of issue denomination, less than 654.38+0 billion yuan accounts for more than half. The average denomination of special bonds for land reserve is 2.826 billion yuan, the median is 867 million yuan, and the minimum denomination is 200 million yuan, such as 2017 of special bonds for land reserve in Mudanjiang City, Heilongjiang Province and Yuncheng City, Shanxi Province; The highest denomination is 43.6 billion yuan, which is 20 18 (Phase II) special debt for land reserve in Jiangsu Province. Most land reserve special bonds are issued with a denomination of 654.38+0 billion yuan or less, accounting for 56.87%; Followed by1-300 million yuan denomination, accounting for 22.5 1%.
Chart 4: Distribution of face value of land reserve special bonds
Source: Wind, such as Institute of Finance.
Fourth, from the issue interest rate, the interest rate of land reserve special bonds is higher, but it still has certain cost advantages. The average issuance rate of special bonds for land reserve is 3.84%, which is at a high level among all kinds of special bonds for project income, second only to special bonds for education projects and toll roads. However, compared with bank loans and other financing methods, land reserve special bonds still have certain cost advantages.
Chart 5: Comparison of the average issue interest rate of special bonds for project income
Source: Wind, such as Institute of Finance.
Fifth, from the perspective of issuers, Guangdong, Jiangsu and Zhejiang are among the top issuers. As of the first half of 20 19, the sum of the issuance of the three provinces exceeded a quarter of the total issuance, accounting for 28.69%; The distribution amount in the eastern coastal areas is generally higher, and the distribution amount in the remote areas in the northeast and west is lower. Jilin, Heilongjiang and Liaoning provinces in Northeast China issued a total of 38.848 billion yuan, accounting for only 3.06% of the total issuance, equivalent to a province in Guangxi. The total issuance of Tibet and the five provinces of Qinghai, Ningxia, Xinjiang and Inner Mongolia in northwest China is 24.965 billion yuan, accounting for only 65.438+0.97% of the total issuance. Except Hong Kong, Macao and Taiwan, the local government of Guizhou Province has not issued special bonds for land reserve.
Chart 6: Regional Distribution of Special Bonds for Land Reserve (100 million yuan)
Source: Wind, such as Institute of Finance.
The influence of special bond purchasing and storage: the transformation of urban investment and new land finance (1) The land purchasing and storage mode forced the transformation of urban investment.
As an important subject of investment and financing construction, urban investment enterprises have made great contributions to local infrastructure construction and urban development. Land assets are the most convenient and available high-quality assets for local governments, and injecting land assets into urban investment enterprises was once a common support method for local governments.
At the beginning of the establishment of the land reserve system, the functions of urban investment enterprises and local land reserve institutions were not clearly defined. Local governments inject various land assets into urban investment enterprises in the name of allocation, and some urban investment enterprises actually undertake the function of land reserve and borrow money from banks and other institutions in the name of land reserve. Since 20 10, the regulatory authorities have successively issued a number of policies and regulations, clarifying the relationship between urban investment enterprises and land reserve institutions, explicitly prohibiting urban investment enterprises from engaging in land reserve work, and opening the "front door" to allow local governments to issue special bonds for land reserve.
Under the background of increasingly strict regulatory policies, the financing and survival pressure of urban investment enterprises has obviously increased. Various policies, such as "all kinds of urban investment companies are not allowed to engage in new land reserve work", "local governments are not allowed to inject public welfare assets and reserve land into financing platform companies", "not allowed to promise the expected proceeds from the sale of reserve land as the source of debt repayment funds for financing platform companies", "not allowed to borrow land reserve loans again" and "not allowed to use the pre-development of reserve land as a service item purchased by the government", are intensively introduced, with strong pertinence, and the reform and transformation of urban investment enterprises is imminent. At present, through the integrated development of investment and financing platform companies, it has become a new orientation for the future development of city investment enterprises to resolve the hidden debt risks of local governments and turn them into market-oriented business entities with independent operation, self-financing and self-risk.
(2) The self-restraint of land finance has been continuously strengthened. Compared with the land finance in the past, the special bond system of land reserve is not only a change of government financing mode, but also strengthens the supervision of local government land supply. Compared with the original platform financing, the biggest advantage of the special bond for soil storage bonds is that its issuance and use are strictly corresponding to the project. The control of its quota can effectively strengthen the vertical monitoring of soil storage projects and the supervision of local governments' debt financing behavior, and curb local governments and financing platforms from using reserved land to raise funds in violation of regulations. And the special debt interest rate is generally low, which can also reduce the project capital cost to a certain extent, so as to optimize the capital structure while controlling the debt risk.
However, the structure of special bonds, mainly land reserve special bonds, has not got rid of the shadow of "land finance". In 20 18, the national land use right transfer income was 6,509.6 billion yuan, while the local fiscal revenue was 9,790.5 billion yuan in the same period, the ratio of the two was as high as 6.649%. The debt repayment fund of special bonds for land reserve comes from the income from the transfer of state-owned land use rights.
Chart 7: Comparison of National Land Use Right Transfer Revenue and Fiscal Revenue (100 million yuan)
Source: Wind, such as Institute of Finance.
There are still some problems in the special debt framework with land transfer income as the main source of debt repayment:
First, the income from land transfer is easily affected by the real estate market, especially the value of state-owned land is relatively high and the price fluctuates constantly. Market depression, land price decline, land transfer income can not reach the expected income, which aggravated financial risks. Therefore, on June 2, 2065438, the Ministry of Finance and the Ministry of Natural Resources proposed in the Measures for Budget Management of Land Reserve Projects (Trial) that the issuance scale of special bonds should not exceed 70% of the expected land transfer income of the project, establish a dynamic risk monitoring mechanism for land reserve projects, and implement project life cycle management to prevent risks.
Second, with the continuous macro-control policy of the state on real estate and the reduction of the incremental scale of urban construction land, the growth space of land transfer income is limited. If there are no other alternative sources of fund income, the future development of special bonds will face bottlenecks. In 20 19, the local government's special debt limit is 2150,000 yuan, and it is expanding rapidly. But in fact, the space left for local banks to issue bonds is still limited, which is contradictory to the huge land reserve demand in the future.
The continuous and orderly supply of land reserve is one of the important guarantees for local economic development, and it is known as the "pioneer" of urban construction and development. It is related to people's livelihood, urban development, raising social funds and ensuring urban development land, which is one of the most important prerequisites for urban management. It is only two years since the first special bond for land purchasing and storage was born in 20 17. It is necessary to further explore and improve the special bond system for land purchasing and storage, better combine it with urban planning and land space optimization, and match it with land market regulation, so as to play a more active role in improving land conservation and intensification and ensuring people's livelihood land use.