Local governments across China will likely see improved fiscal positions this year due to a stabilization of the property market and macro-economy, global ratings agency Moody's claimed yesterday.

The tax and non-tax revenue of local governments rose 11 percent year on year in the first quarter, and will continue rising throughout the year, it said in a research report.

Real estate markets are stabilizing in many provinces, buoying house prices and land sales, a major source of revenue, it said.

In the first quarter, 22 of 31 province-level regions on the Chinese mainland reported rises in residential and commercial real estate construction on a year-on-year basis.

The housing market started to warm up in the second half of last year after cooling for more than 12 months, boosted by government support measures such as interest rate and transaction tax cuts, and lower down payment requirements.

Of 70 large and medium-sized Chinese cities surveyed in April, 65 saw new home prices climb month on month, up from 62 in March, official data showed.

Faster economic growth, a result of monetary and fiscal stimulus, will also support local fiscal revenue, the research report claimed.

GDP growth accelerated in 14 regions in the first quarter, with more than half of all regions showing higher debt and equity credit growth, it said.

However, fiscal positions will vary widely, with regions heavily exposed to excess capacity industries set to lag, it said.

An industrial glut, plus weaker property investment and foreign trade, dragged down China's economic growth to 6.7 percent in the first quarter.

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