China’s tax revenue continues to decline in January-February, while non-tax revenue increases.

Chinese Economy Continues to Struggle with Declining Tax Revenue

Recent official data from China reveals that the country’s economy is facing challenges, with national tax revenue showing a 3.9% year-on-year decrease for the period of January to February 2025, following a 3.4% decline in tax collection nationwide last year. Despite this trend, non-tax revenue, including fines, continues to increase.

On March 24th, the Ministry of Finance of the Communist Party of China released the financial situation for January to February 2025.

The data indicates that during this two-month period, the national general public budget revenue was 4.3856 trillion yuan. This marked a 1.6% decrease compared to the previous year. Among this revenue, tax revenue amounted to 3.6349 trillion yuan, down by 3.9% year-on-year, while non-tax revenue reached 0.7507 trillion yuan, showing an 11% increase.

Key tax revenue items included domestic value-added tax at 1.5128 trillion yuan, up by 1.1% year-on-year; domestic consumption tax at 0.4079 trillion yuan, up by 0.3%; corporate income tax at 0.9113 trillion yuan, down by 10.4%; personal income tax at 0.4134 trillion yuan, up by 26.7%; import value-added tax and consumption tax at 0.2625 trillion yuan, down by 9.4%; customs duties at 0.316 billion yuan, down by 16.2%; vehicle purchase tax at 0.348 billion yuan, down by 32.5%; deed tax at 0.731 billion yuan, down by 21.7%; among others.

In terms of financial expenditure, the national general public budget spending reached 4.5096 trillion yuan in January to February, showing a 3.4% increase compared to the previous year.

Non-tax revenue continued to grow during this period, amounting to 0.7507 trillion yuan, representing an 11% increase year-on-year. According to the Chinese media outlet “Caijing,” non-tax revenue had already grown by 25.4% compared to the previous year in 2024, with confiscation revenue increasing by 14.8%.

China’s non-tax revenue is composed of specific revenue, compensated use of state-owned resources (assets) revenue, administrative fees revenue, confiscation revenue, government housing fund revenue, among others.

Of these, “confiscation revenue” mainly comes from local income, primarily concentrated at the prefectural and county-level finance departments, with revenue primarily from public security and courts, including general confiscation revenue from public security, transportation, tax, courts, market regulation, and confiscation revenue from public security, market regulation, and smuggling enforcement.