Skip to main content

China's Tax Revenue Drops as GDP Grows

China's tax revenue and GDP have been going in opposite directions. China's Finance Ministry reported a 3.5-percent decline in tax revenue in the first quarter of 2025 from the same period a year earlier, contrasting with the 5.4-percent growth in GDP reported for the same period. 

Sources: China's Ministry of Finance and National Bureau of Statistics.

The divergence between tax revenue and GDP follows very similar figures posted for 2024 when tax revenue fell 3.4 percent and GDP reportedly grew 5 percent. Tax revenue once grew more than 20 percent annually when GDP growth was 10 percent or more in 2010 and 2011, but growth has become choppy since 2019. Tax revenue declined in 3 of the last 4 years and grew only 1 percent in 2019. Either GDP statistics do not actually reflect economic activity or China's economy has fallen into a habit of building and making things that fail to generate revenue. 

China's total tax revenue grew less than 200 billion yuan between 2018 and 2024, and revenue was up and down every year. In comparison, revenue had grown about 550 billion yuan during the 6 years between 2012 and 2018.

Data from China National Bureau of Statistics database.

The largest component of China's tax revenue is the domestic value-added tax (VAT)--which should be roughly proportional to GDP. According to the Q1 2025 Ministry of Finance report, domestic VAT revenue increased by 2.1 percent year-over-year in Q1 2025, less than half the rate of reported GDP growth. Consumption tax revenue increased 2.2 percent. The tax on car purchases fell 27.6 percent from a year earlier.

Company taxes--the second-largest component of revenue--fell by 6.8 percent in Q1 2025. 

Foreign trade is not a money-maker for the Chinese government. The government gives refunds of VAT paid on products that are exported and assesses VAT on the full landed value of imports. Refunds of VAT on exported products increased by 14 percent in Q1 2025. Revenue from VAT on imports fell by 8.7 percent and tariff revenue fell by 14.8 percent in Q1 2025.

Labels:

Comments

Post a Comment

Popular posts from this blog

Xi Jinping's Doctoral Thesis

Xi Jinping is the vice president and presumed next president of China but little is known about him. In this post the dimsums blog offers its contribution to the genre of Xi Jinping-ology by conveying Xi's decade-old views on agricultural markets. Ten years ago Xi Jinping wrote a thesis, "Tentative Study of Agricultural Marketization" (中国农村市场化研究) for a Doctor of Law degree at Tsinghua University in Beijing, a top breeding-ground for Chinese officials. The dimsums blogger has spent several hours poring over the 200-plus page tome to see what it reveals about Dr. Xi. The thesis is remarkably close to what China has been doing lately in agricultural policy, suggesting that Xi (or the person who actually wrote the thesis) has a major say in policy or is at least in agreement with what's being done. There is nothing adventurous, controversial (or insightful) in the thesis. It seems to be the work of a wonkish technocrat who is not prone to talk out of turn or wander from...
15 comments
Read more

Divergence in U.S. & Chinese egg prices

High egg prices are a hot topic in the United States. China, in contrast, has a glut of eggs and depressed prices.  The March 14, 2025 USDA Agricultural Marketing Service weekly eggs market overview reported that U.S. egg prices continued declining during the second week of March as the supply situation improved. No significant highly pathogenic avian influenza (HPAI) outbreaks have occurred in March and U.S. egg demand is relatively light. The average U.S. wholesale price for Grade A large white eggs was $4.15 per dozen, down sharply from their February peak.  Until 2021, Chinese and U.S. wholesale egg prices had been roughly equal at about $1-to-$2 per dozen with no trend. U.S. prices fluctuated more than Chinese prices, so the U.S. price was sometimes higher, sometimes lower than the Chinese price after converting them to dollars per dozen.  Chinese prices converted using monthly exchange rate and assuming 0.6 kg per dozen. Sources: USDA and China Ministry of Agricult...
Post a Comment
Read more

China's Corn & Wheat Imports Down 97% From Last Year

China's first customs data for 2025 feature a 97-percent decline in corn and wheat imports from a year earlier. Soybean imports were up slightly by volume (but down in value), and dairy, pork, poultry, and seafood imports rebounded year-on-year. Life was less sweet in China with a 93.7% decline in sugar imports, and drinking appears to be up as wine and beer imports posted gains.   China's agricultural imports for January-February 2025 were down 14.7 percent from a year earlier. The value of farm and food goods imported for the first two months of 2025 totaled $30.7 billion, down $5.26 billion from the same period in 2024. China's exports of agricultural products during January-February totaled $15.2 billion, up $393 million from a year earlier.  Data from China Customs Administration website. As usual, soybeans were the largest component of China's agricultural imports during January-February 2025 with a value of $6.3 billion. Meat imports were valued at $4.1 billion, ...
2 comments
Read more