--FILE--Chinese migrant workers labor at the construction site of a residential property project in Nanjing city, east China's Jiangsu province, 2 January 2015. Local governments in some of China's smallest cities are snapping up an increasing amount of their own land at auctions, in a destructive cycle designed to prop up property prices but which is ravaging their own finances. Local government financing vehicles in at least one wealthy province, Jiangsu, which borders Shanghai, accounted for more land purchases than property developers did in 2013 ª the last year for which data were available ª according to research collated by Deutsche Bank. Although Deutsche Bank only reviewed data for four provinces, concerns about the health of property markets in third-tier cities across China are mounting. Local government budgets, especially in smaller cities, rely heavily on land sales, which in turn are dependent on strong property demand and prices. A glut of new building combined with tougher credit markets has cooled interest in all but the largest cities, forcing local governments to step in and prop up their own land prices.
