BEIJING, (Reuters) – The Chinese government saw its revenue from land sales drop for the fourth consecutive month. This was despite cash-strapped Chinese developers being cautious about buying land after stricter regulations on new borrowing.

The October value of government land sales fell by 13.14% compared with a year before to 573.7 billion yuan (89.90 billion). This was after a fall of 11.15% in September according to Reuters calculations based on data from the finance ministry.

Many developers including China Evergrande Group have grown desperately short of cash since authorities last year unveiled the “three red lines” – a key policy of President Xi Jinping that imposes limits on liabilities-to-assets, net debt-to-equity, and cash-to-short term borrowing ratios.

Analysts warn that poor demand from developers in China’s urban auctions could lead to a squeeze on regional finances. This will force local governments to look for alternative income sources to finance investments and support their economy.

Moody’s recently released a report that stated “Declining Land Sales will restrict fiscal funding for Infrastructure, leading Chinese Regional and Local Governments to temporarily switch to debt-funded Growth.”

Different regions and provinces are dependent on different amounts of land sales revenue.

Moody’s says that the uneven regional growth “will persist with developed provincies continuing better than those less-developed,”

China’s government land sales revenue grew 6.1% to 5.9371 trillion yuan ($930.29 billion) in January-October from a year earlier，data from the finance ministry showed, slowing from the 8.7% rise in the first nine months.

The Chinese Land Regulator imposed limitations on land sales in February. It allowed up to three auctions per year in 22 cities, including Beijing, Shanghai, and Shenzhen. These rules were intended to curb rising land prices, which can otherwise cause higher home prices.

A close to completed round of auctions in which 22 cities held land sales was conducted by private developers has sold at least 138.7 Billion Yuan. That’s down roughly 75% from March-June when 553.1 Billion Yuan were the highest level of the sale.

China’s economic woes are worsening in recent months. Prices dropped in new and resale properties in October due to deeper contractions in investment and construction start.

($1 = 6.3816 renminbi)