China’s Fiscal Revenue in 2024

BEIJING (Reuters) – China’s fiscal revenue in 2024 grew 1.3% from a year earlier, a significant slowdown from a 6.4% increase in 2023, according to finance ministry data released on Friday. The economic growth was impacted by a prolonged slump in the property market and reduced domestic demand.

Fiscal revenues in 2024 totaled 21.97 trillion yuan ($3.03 trillion), comprising 17.497 trillion yuan in tax receipts and 4.473 trillion yuan in non-tax income.

Tax and Non-Tax Revenue Trends

Tax revenue declined by 3.4% in 2024 compared to the previous year, while non-tax revenue saw a notable increase of 25.4%. The ministry noted an alarming trend where local governments, facing cash shortages, imposed ad-hoc fines and confiscations on firms, further damaging business confidence.

In December, Premier Li Qiang stated that China must enhance law enforcement oversight and monitor abnormal growth of fines and confiscations, vowing to improve the business environment and restore market confidence.

Non-tax revenue includes various sources, such as administrative fees, fines, confiscations, and profits from state-owned enterprises.

Impact of Land Sales on Revenue

Revenue from land sales by local governments dropped 16% in 2024 from the prior year, underscoring the severe downturn in the property sector, which has historically been a significant driver of local economic growth. This drastic decline has negatively impacted overall business activity.

Fiscal expenditure rose 3.6% last year, down from 5.4% in 2023.

In response to external economic challenges, China’s top leaders have committed to a more proactive fiscal policy this year. Despite achieving a 5% economic growth last year, aligning with the government’s target, many citizens expressed concerns over declining living standards as Beijing struggles to transition its industrial and export growth to consumers while managing local government debt.

> ($1 = 7.2441 Chinese yuan renminbi)