Behind the sale of residential properties for civil servants: the profit contribution ratio of state-owned enterprises in this area has increased to 20%. Budget | Property | Profit

Selling properties by real estate companies was originally a normal market behavior, but recently, Jinan Chengtou has been selling some properties in the residential areas of Dongcheng Yijia and Xijiang Huafu, two civil servants, to the public for the first time, which has attracted a lot of attention from the outside world. On July 20th, the first batch of 368 units from Dongcheng Yijia were publicly subscribed, and the subscription was full on July 22nd.

The full name of Jinan Urban Investment is Jinan Urban Investment Group Co., Ltd. It is a municipal level state-owned enterprise, controlled by the local State owned Assets Supervision and Administration Commission and the Ministry of Finance. Jinan Urban Investment is mainly responsible for the construction of government key projects, and is responsible for the investment, construction, and operation of urban areas, industrial parks, and water resource development. The total assets of the group exceed 200 billion yuan.

A joint credit rating report released by the Shanghai Stock Exchange website in June this year showed that Jinan Urban Investment, as an important infrastructure construction and state-owned asset operation entity in Jinan, had a good external development environment during the tracking period and continued to receive strong external support. At the same time, United Credit also noted that factors such as high financial expenditure pressure, long asset realization cycles, heavy overall debt burden, and high short-term repayment pressure may have adverse effects on the company's credit level.

According to the above rating report data, as of the end of March 2023, the total debt and total debt capitalization ratio of Jinan Urban Investment were 104.753 billion yuan and 65.12%, respectively, indicating a heavy debt burden on the company; After considering other equity instruments, the company's debt burden is higher than the above indicators. The short-term debt to cash ratio of the company is 0.23 times, indicating significant short-term repayment pressure.

The above rating report data shows that from January to March 2023, Jinan Urban Investment achieved a total operating revenue of 1.976 billion yuan and a total profit of 42 million yuan. The total operating revenue of Jinan Urban Investment in 2022 was 11.207 billion yuan, with a total profit of 1.215 billion yuan.

The sale of some properties by Jinan Urban Investment can obviously alleviate the current debt pressure in the eyes of the outside world. As an important local government investment and financing platform, Jinan Urban Investment has intricate connections with local finance. The sale of "civil servant residential areas" by Jinan Urban Investment has also attracted attention from the outside world to the local financial debt situation. This year, under the tight balance of fiscal revenue and expenditure in Jinan, in order to address the contradiction between revenue and expenditure, the local government has increased the profit turnover ratio of municipal state-owned enterprises, including Jinan Urban Investment, to 20%.

Jinan, as the capital city of Shandong Province, is the center of politics, economy, culture, science and technology, education, and finance in Shandong Province. Last year, its gross domestic product was about 1.2 trillion yuan. Among the 16 cities in Shandong Province, Jinan has a lower fiscal revenue scale than Qingdao, ranking second in the province, and has a higher dependence on land finance.

Similar to many places, under the impact of the epidemic, the local economic growth rate has slowed down, coupled with the implementation of large-scale tax and fee support policies, local fiscal revenue has been affected to a certain extent.

According to data from the Finance Bureau of Jinan City, in 2020, due to the impact of the epidemic, in order to make up for the tax reduction, local non tax revenue maintained a rapid growth, and the annual general public budget revenue slightly increased to a level of 90 billion yuan. In 2021, the economy recovered and tax revenue maintained a rapid growth. The general public budget revenue grew rapidly that year, exceeding 100 billion yuan for the first time, reaching 100.76 billion yuan. In 2022, due to the impact of the epidemic and the implementation of large-scale tax and fee reduction policies, although non tax revenue grew rapidly to make up for the reduction, the general public budget revenue for the whole year slightly declined, reaching approximately 100.1 billion yuan.

With the recovery growth of the economy this year, data from the Finance Bureau of Jinan City shows that the general public budget revenue of the city in the first half of this year was 57.37 billion yuan, a year-on-year increase of 6.1%, in line with local expectations at the beginning of the year. However, this growth rate is slightly lower than the average level in Shandong Province and significantly lower than the local income growth rate nationwide. This is mainly related to the significant decline in non tax revenue in Jinan in the first half of the year.

In addition to general public budget revenue, the revenue from local government funds, mainly from land sales, is also an important source of fiscal revenue in Jinan.

According to data from the Jinan Finance Bureau, the revenue of government funds in Jinan City reached 101.9 billion yuan in 2019, decreased to 82 billion yuan in 2020, and rebounded to 101.6 billion yuan in 2021. However, in 2022, due to the deep adjustment of the real estate market and the sluggish land market, the revenue of local government funds almost halved, dropping to about 54.7 billion yuan.

When discussing the problems and deficiencies in local fiscal reform and development in the budget execution of Jinan City last year and this year's budget draft report, the primary issue is the prominent contradiction between fiscal revenue and expenditure at all levels, and the high pressure on the stable operation of grassroots finance. In predicting the fiscal revenue and expenditure situation for this year, the report believes that the local fiscal revenue and expenditure contradiction is still exceptionally prominent, and the tight and balanced fiscal operation has not changed. The pressure of increasing fiscal revenue, reducing expenditure, and preventing risks this year is very high.

Yang Yewei, Chief Analyst of Fixed Income at Guosheng Securities, recently wrote an article stating that the lifting of purchase restrictions in Jinan at the beginning of this year has led to a significant increase in the sales area and amount of new houses in the first half of the year, which is expected to provide some support for land transfer revenue.

According to the above-mentioned budget report in Jinan, it is expected that the revenue of government funds will reach 65.1 billion yuan this year, a year-on-year increase of about 19%. Of course, this is only an expected data, and there is uncertainty in the final number of executions.

In recent years, in order to support economic growth, Jinan has increased its borrowing efforts. The scale of government debt has been increasing year by year, but it is within the debt limit, and the overall risk is safe and controllable.

According to data from the Finance Bureau of Jinan City, the balance of local government debt in Jinan City at the end of 2019 was about 128.9 billion yuan. After three years of the epidemic, this number increased to about 266 billion yuan by the end of 2022, but it was within the current debt limit.

According to Luo Zhiheng, Chief Economist of Yuekai Securities, considering the level of economic development, although Jinan has a large debt scale, its debt ratio is actually lower, below 20%.

Yang Yewei calculated that in 2022, the narrow debt ratio of Jinan City was 633%, lower than Qingdao and Weihai, and the broad debt ratio was 581%, ranking second in the province and lower than Qingdao. Compared to other provincial capitals, Jinan's debt ratio is at a moderate level. Jinan has abundant industrial and financial resources, and sufficient funding security cushion.

When discussing the focus of this year's financial work, the above-mentioned budget report of Jinan City stated that government debt repayment and interest payments will be fully included in budget management, debt repayment plans will be formulated, funding sources will be determined, and timely and full repayment will be ensured. Accelerate the market-oriented transformation of platform companies, standardize financing behavior, eliminate illegal borrowing and the addition of implicit government debt, and firmly hold the bottom line of preventing systemic risks.

In order to alleviate the current fiscal revenue and expenditure contradiction, Jinan has also taken some new measures in the above-mentioned budget report this year. This includes scientific scheduling of organizational income and full collection of tax receivables. Continue to live a tight life, such as reducing the daily public expenditure quota by 20% at the city level, and only reducing the expenses for non staff members without increasing them.

Another key measure is to strengthen the coordination of financial resources in Jinan, increase the proportion of profits turned over by municipal state-owned enterprises to 20%, and increase the proportion of state-owned capital operation budget transferred to general public budget at the city level to 35%.

In addition, in response to the current phenomenon of insufficient overall planning and low utilization efficiency of some assets in administrative institutions, the Ministry of Finance issued the "Guiding Opinions on Revitalizing State owned Assets in Administrative Institutions" in October last year, which requires accelerating the revitalization and utilization of various types of state-owned assets such as houses, land, and vehicles, improving the efficiency of asset revitalization and utilization, and truly implementing the requirements of tight living standards.

According to data from the Ministry of Finance, the total amount of administrative state-owned assets in China at the end of 2021 was 54.4 trillion yuan, and the total amount of assets of state-owned enterprises in China was 30.83 trillion yuan. Experts believe that further activating such assets in the future can also alleviate local fiscal revenue and expenditure conflicts to a certain extent.