CHINA's Major Tax Problems
Channel: Tree's Economy
Date: 23/04/2024

CHINA's Major Tax Problems 

In this video, We discuss China's challenges, driven by its complex economic landscape as the world's second-largest economy with advanced financial systems yet grappling with a substantial informal sector. Despite significant government spending needs, China's tax revenue remains low at 9% of GDP, contrasting sharply with other major economies. 

The video refrains from advocating specific tax policies but aims to dissect the systemic hurdles hindering China's efforts to establish a sustainable financing system for governmental activities. It scrutinizes core issues such as difficulties in reaching the vast population, rampant tax avoidance, and misallocation of collected taxes, exacerbated by China's decentralized governance structure. 

The script also highlights the risks associated with local governments' reliance on business taxation and land leasing revenues, particularly amidst financial turmoil in the real estate sector and uncertainties from the COVID-19 pandemic. 

Additionally, it explores the complexities surrounding expiring land leases and ambiguous land ownership rights, offering valuable insights into China's tax dilemma and its broader implications for economic stability and global positioning.