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

China's 2024 Ag Imports Shrank in Value

China's agricultural imports declined 7.9 percent during 2024 to reach $215 billion, according to data posted on the customs administration website. The 2024 value was lower than each of the 3 preceding years. Agricultural exports were up 4.1 percent to reach $103 billion. Source: Data from China Customs Administration December reports. The top two agricultural import categories by value both declined. Soybeans ($52.75 billion in 2024) fell 10.9 percent, and meat ($23.38 billion) fell 15.1 percent. Cereal grain imports ($15 billion) were down 28 percent and fish & shellfish imports ($18.5 billion) were down 6.2 percent. Edible oils imports ($10.6 billion) were down 17.8 percent. Fruit, rubber, cotton and wool and beverage imports were up for the year. The decline in value of imports partly reflected a decline in prices. Customs reported that the volume of soybean imports for calendar year 2024 reached a record 105 million metric tons, up 5.6 million metric tons from the previou...
1 comment
Read more

Feed Boom & Cratering Grain Imports; China Leaves Us Guessing

In the first half of 2025 China increased its meat and egg production by a combined 1.58 million metric tons (mmt) from a year earlier, a moderate increase of 2.5%. Meanwhile, animal feed output during H1 2025 compiled from feed industry association reports increased by 14.5 mmt (+10 percent) from a year ago. China's 14.5-mmt increase feed output growth outpaced the 1.58-mmt growth in meat production by a ratio of 9:1. It's hard to make sense of these inconsistent figures.  [note: The June 2025 feed industry association report has a 7.7% yoy growth rate for feed output which is inconsistent with the 10.1% growth shown here calculated by comparing data from monthly reports issued last year. Growth rates for complete feed were 8.1%, concentrates -1.5%; additives 6.9%. These inconsistencies are common in the feed industry association reports, a reason for doubting the accuracy of this data.] There is no boom in demand for feed ingredients to fuel a huge increase in feed production...
Post a Comment
Read more