Report Industry Investment Rating - Not provided in the given content Core Viewpoints - The most crucial aspect of the new land - use policy in Document No. 38 issued by the Ministry of Natural Resources is that the annual new urban - rural construction land should be less than or equal to the area of revitalized stock land, and new construction land is not to be used for commercial real - estate development in principle. In the short term, the impact on local land transfer and real - estate enterprises' land acquisition is limited. In the medium term, there may be downward pressure on land auction revenues and real - estate enterprises' land acquisition, with varying impacts on different cities. In the long term, if the policy helps the real - estate market stabilize and recover, it could be beneficial to the land and real - estate markets [2][40]. - In 2025, the national land auction market remained weak, with a cumulative transaction of 335.47 billion yuan, a year - on - year decrease of 11%, and the decline continued to widen. Twelve provinces (municipalities) saw positive year - on - year growth in land transaction volume, with partial provinces in the west and northeast showing obvious recovery, while most provinces in the east and central regions were still in adjustment [3][41]. - Document No. 38 may affect local land auction revenues and increase the interest - payment pressure on less - developed regions, thus influencing the debt - repayment ability of local urban investment companies. In 2025, the interest - payment pressure in key provinces showed obvious improvement in some regions, but increased in others [3][43]. Summary by Relevant Catalogs 1. How does the Ministry of Natural Resources Document No. 38 affect land supply? - Document No. 38's principle of "determining new construction based on stock" will promote local governments to revitalize stock land. In the short term, effective supply can be formed through measures like accelerating the land - use planning adjustment of "available but unused" land, without directly negatively impacting local land transfer revenues or real - estate investment. In the medium term, the space for local governments in small and medium - sized cities to obtain fiscal revenues through land transfer will narrow significantly [7]. - The new construction land refers to the land converted from non - construction land (mainly agricultural and unused land) through legal procedures and included in the national annual new construction land plan. The state's control over new construction land has evolved from specific object requirements to a comprehensive hard constraint [8][9]. - In the short term, the policy's impact on land transfer revenues and new housing projects is limited. In the medium term, it will have a certain impact on local land transfer revenues, especially in small and medium - sized cities. For real - estate enterprises, the policy's impact on high - tier cities is relatively limited, while the impact on low - tier cities is mild. In the long term, if the real - estate market stabilizes, it will be beneficial to the land market and real - estate investment [11][12][13]. 2. How was the land transaction situation in 2025? - Nationally, the land auction market was weak. In December 2025, the land transfer fee was 79.29 billion yuan, a year - on - year decrease of 23.5%. The cumulative transaction in 2025 was 335.47 billion yuan, a year - on - year decrease of 11%, and the decline continued to widen. The national state - owned land transfer revenue in 2025 was 415.18 billion yuan, a year - on - year decrease of 14.75%, the fourth consecutive year of decline since 2022, but the decline slightly narrowed [16][19]. - Twelve provinces and municipalities achieved positive year - on - year growth in land transaction volume in 2025, with partial provinces in the west and northeast showing obvious recovery. Provinces with high year - on - year growth in land transaction volume included Chongqing, Jilin, Yunnan, Ningxia, Guizhou, Xinjiang, and Heilongjiang. Provinces with significant year - on - year declines included Anhui, Shaanxi, Guangxi, Henan, Shandong, and Jiangsu [22]. - In 2025, the proportion of urban investment companies' land acquisition generally decreased. At the prefecture - level city level, cities with high land transaction volumes in 2025 were concentrated in the Yangtze River Delta, Chengdu - Chongqing, and Pearl River Delta regions. A small number of cities showed obvious recovery, while most were still in deep adjustment [23][25]. 3. Pay attention to regions with high interest - payment pressure - Document No. 38 may affect local land auction revenues. Although the package debt - resolution policy has helped local governments save interest expenses, the real - estate market adjustment has led to a continuous decline in local government land transfer revenues, and the contradiction between local fiscal revenue and expenditure remains prominent [28]. - In terms of the absolute scale of interest, the total interest expenditure on local debts and urban investment companies' interest - bearing debts in Jiangsu, Zhejiang, Shandong, and Sichuan was much larger than in other regions, with an annual total interest - payment scale exceeding 300 billion yuan. The ability of land finance to cover local debt interest showed strong regional differentiation [29][32]. - The interest expenditure of urban investment companies decreased comprehensively. In 2025, the interest - coverage ratio of land revenue to urban investment companies' interest in key provinces showed obvious improvement in some regions, while it decreased in others. At the prefecture - level city level, the interest - payment pressure of some cities was controllable, while others faced large interest - payment gaps [34][36][37]. 4. Summary - The new land - use policy in Document No. 38 has limited short - term impact on local land transfer and real - estate enterprises' land acquisition. In the medium term, there may be downward pressure on land auction revenues and real - estate enterprises' land acquisition, with different impacts on different cities. In the long term, it may be beneficial to the land and real - estate markets if the policy helps the market stabilize [40]. - In 2025, the national land auction market was weak, with some provinces showing positive growth and others in decline. The interest - payment pressure in some key provinces improved in 2025, while it increased in others [41][43].

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - Since 2025, rising interest rates have increased the issuance cost of local government bonds, and the decline in land revenue has led to a continuous increase in the interest - payment pressure of special bonds. The national - level interest - payment pressure is expected to reach 8.42% in 2025, approaching the 10% policy warning line. [3] - The pressure shows significant structural differentiation. Some provinces and most prefecture - level cities have already reached or exceeded the risk threshold, and the debt risk shows a trend of shifting from the grass - roots level to the provincial level. [3] - Although the growth of interest - payment expenditure is squeezing the space for other fiscal expenditures, due to the large base of existing debt, the marginal impact of the current interest rate increase is generally controllable. It is necessary for the market interest rate to rise by more than 80 basis points on the existing basis to touch the national warning line or exhaust the fiscal maneuvering space. Therefore, it is expected that the local interest - payment pressure will not trigger monetary policy easing in the short term. Interest rate cuts or adjustments to the bond term structure are more of a medium - to - long - term response logic. [3] 3. Summary According to the Directory 3.1 2025 Since the Overall Interest Rate Adjustment, Local Interest - Payment Pressure Has Risen - In 2025, the yield of 30 - year treasury bonds increased by 43 basis points to 2.27% at the end of the year compared with the beginning of the year. The yield of local bonds also increased, and the spread with treasury bonds widened significantly. The weighted average issuance rate of 30 - year local bonds in the primary market rose to 2.48%, significantly increasing the new financing cost of local governments. [6][15] - Since 2020, the government - funded budget revenue, the main source of repayment for special bonds, has declined due to the decline in land fiscal revenue. At the same time, the balance of local government debt has continued to accumulate, especially the rapid growth of special bonds, leading to a continuous increase in the national - level government interest - payment amount. In 2025, the national - level local government special bond interest payment is expected to be 960.2 billion yuan, and the total expenditure of local government - funded budget is 1,140.96 billion yuan (budgeted amount), with the national - level special bond interest - payment pressure expected to be 8.42%. [6][16] 3.2 Two Ways to Measure the Threshold of Local Interest - Payment Pressure - Policy - related regulations: According to the "Emergency Response Plan for Local Government Debt Risks" in 2016, if the annual interest - payment expenditure of special debt of a city or county government exceeds 10% of the government - funded budget expenditure of the current year, the debt management leading group or the debt emergency leading group must initiate a fiscal restructuring plan. [26] - The crowding - out effect on other fiscal expenditures: Even if the policy red line is not reached, the continuous increase in interest - payment expenditure will occupy funds that could be used in public services, infrastructure and other fields, affecting the normal function of finance. [7] 3.3 The 10% Critical Value of the Special Bond Interest - Payment Ratio - The general bond interest - payment expenditure of various calibers in China fluctuates around 2%, far lower than 10%. Therefore, the subsequent analysis mainly focuses on special bonds. There are only three cases of fiscal restructuring in China, but there may be other regions where the interest - payment pressure has reached the warning line but no fiscal restructuring has been initiated. [26] - The local government special bond interest - payment pressure is calculated as the special bond interest - payment expenditure divided by the government - funded budget expenditure. The general bond interest - payment pressure is calculated as the general bond interest - payment expenditure divided by the general public budget expenditure. [27] 3.4 From the Perspective of Fiscal Expenditure Structure, the Threshold of Interest - Payment Pressure - National level: Since 2020, local general expenditures have been gradually compressed, from 41% in 2017 to 37% in 2024. The proportion of key expenditures has increased, and the proportion of debt interest - payment expenditure in rigid expenditures has also shown an upward trend. [57] - Provincial and municipal levels: The proportion of interest - payment expenditure varies significantly. There is a negative relationship between the proportion of interest - payment expenditure and the proportion of general and key expenditures, and the general expenditure is more squeezed. [62] 3.5 After Reaching the Critical Threshold, Interest Rate Cuts or Shortening the Bond Duration May Occur - There are two potential ways to relieve the interest - payment pressure in the long term: one is to cut interest rates through monetary policy to directly reduce the interest rates of new and replacement bonds; the other is for local governments to adjust the issuance structure, shorten the bond duration, and replace some high - cost long - term bonds with short - term funds at lower interest rates. [9] - However, the average duration of new special bonds remains at a high level of about 14 years, and the issuance proportion of 30 - year bonds is close to 30%. The process of "shortening the duration" is slow in practice. [9][85] - Overall, in the current environment, the local government interest - payment pressure is relatively controllable. Interest rate cuts and shortening the duration are long - term logics. In the short term, attention should be paid to the direct impact of the increase in the supply of ultra - long - term local bonds on the bond market. [9][87]