According to data released by the Chinese Ministry of Finance on September 20th, in August this year, China’s general public budget revenue decreased by 2.8% compared to the same period last year. At the same time, land sales revenue dropped by 41.8% year-on-year, marking a consecutive two-month decline of over 40%, the largest monthly drop since June 2015.
The data released by the Chinese Ministry of Finance on September 20th revealed that in August, the country’s general public budget revenue, or narrow-caliber fiscal revenue, dropped by 2.8% year-on-year, expanding by 0.9 percentage points compared to the previous month. Among these, tax revenue decreased by 5.2% year-on-year, widening by 1.2 percentage points; non-tax revenue grew by 8.8% year-on-year, but the growth rate decreased by 5.7 percentage points from the previous month. This indicates that fiscal revenue is still mainly supported by non-tax revenue.
Looking at specific tax categories, in August, value-added tax decreased by 1.7% year-on-year, narrower than the previous month’s decrease of 1.2 percentage points; corporate income tax rebounded by 20% year-on-year after three consecutive months of decline, compared to a 4.9% decrease in July; consumption tax fell by 4.6%, widening by 1.5 percentage points from the previous month; personal income tax narrowed its year-on-year decrease by 1.7 percentage points to 2.9%; import value-added tax and consumption tax increased by 2.3% year-on-year, but the growth rate dropped by 6 percentage points; and tariff growth rate also decreased by 0.6 percentage points to 4.6%.
Furthermore, tax revenues related to land and real estate continued to perform poorly. In August, deed tax dropped by 20.3% year-on-year, with a significant increase of 10.1 percentage points compared to the previous month; and land value-added tax decreased by 25.8% year-on-year.
Land sales revenue, as an important source of local financial resources, continues to decline. According to Cai Xin Net on September 21st, based on the data from the Ministry of Finance, in August, revenue from the transfer of state-owned land use rights decreased by 41.8% year-on-year, marking a consecutive two-month decline of over 40% and the largest monthly drop since June 2015. As a result, government fund revenue saw a year-on-year decline of 21.1% from January to August this year.
Data from the Chinese Ministry of Finance published on its official website on September 20th in the “Financial Revenue and Expenditure Situation of August 2024” showed that from January to August this year, China’s general public budget revenue was 14.7776 trillion yuan, a decrease of 2.6% year-on-year. Excluding special factors such as base inflation caused by the inclusion of tax deferrals for small and micro-enterprises from the same period last year, and tail-down revenue due to tax reduction policies introduced in the middle of last year, the comparable growth is around 1%.
Looking at the central and local levels, in the first eight months, central public budget revenue decreased by 6.2% year-on-year, while local public budget revenue increased by 0.4% at the local level. In terms of tax and non-tax revenue, national tax revenue decreased by 5.3% year-on-year, while non-tax revenue increased by 11.7%.
Concerning the main tax categories, value-added tax fell by 4.9% year-on-year, consumption tax increased by 4.2%, corporate income tax decreased by 5%, and personal income tax declined by 5.2%.
As fiscal tax revenue decreased, fiscal expenditures in August saw a reversal from growth to decline. During that month, national general public budget expenditure, or narrow-caliber fiscal expenditure, shifted from a 6.6% increase to a 6.7% decrease compared to the previous month. By the end of August, fiscal expenditures had only reached 60.9% of the initial budget, marking one of the lowest expenditure rates in nearly five years, only surpassing that of the outbreak year of 2020 during the same period.
In response to this, a user on Cai Xin Net, identified as “q2gMV1X70,” remarked, “The collapse of land finance, and then turning the originally profitable automotive industry into a money-losing industry dependent on subsidies. The state of fiscal revenue is going to be chaotic for a long time.”
Another netizen, “Kang Kang,” believes, “If the central government doesn’t intervene, local governments will face big problems.”
Expressing a sense of resignation, “Xi Yu Mian Mian” lamented, “No wonder local governments have to sell steel and iron.”