China's national general public budget revenue has continued its positive trajectory this year. On August 21, the Ministry of Finance released the national fiscal revenue and expenditure data for the first seven months of the year, a document widely regarded as the government's "account book." The standout highlight is the steadily accelerating cumulative growth rate of national general public budget revenue.
According to Ministry of Finance data, from January to July, national general public budget revenue reached 14.3696 trillion yuan, a year-on-year increase of 5.8%. This growth rate is 1.1 percentage points higher than that of the first half of the year, marking a new high for the year. It also significantly outpaces both the growth rate recorded during the same period last year (0.1%) and the official annual revenue growth target (2.2%).
Why has the growth rate of national general public budget revenue exceeded expectations this year, maintaining steady and rapid expansion? This is closely linked to rising prices, a buoyant stock market, profit growth in certain industries, and robust foreign trade, all of which have driven faster growth in tax revenue. Ministry of Finance data shows that in the first seven months, tax revenue within national general public budget revenue reached 11.8381 trillion yuan, up 6.7% year-on-year. This growth rate is notably higher than that of the same periods in the previous two years (which were -0.3% and -5.4%, respectively). Tax revenue has clearly been the primary engine driving the growth of general public budget revenue.
The steady and rapid growth of tax revenue, often dubbed the "economic barometer," this year also reflects the smooth operation of China's economy. The swift increase in tax revenue is initially linked to rising prices. Tax revenue is calculated at current prices, and this year's price increases, especially the rise in the Producer Price Index (PPI) (which saw a 3.5% year-on-year increase in July), have directly boosted the growth rate of tax revenue. For instance, in the first seven months, domestic value-added tax (VAT), the largest tax category, amounted to 4.5149 trillion yuan, a 6.1% year-on-year increase. This was primarily driven by the sustained growth of industry and services, along with the upward movement in industrial producer prices.
As artificial intelligence accelerates its integration across various sectors, the demand for computing power has surged. Rapid profit growth in sectors such as electronics has also contributed to higher corporate income tax revenue. Data from the National Bureau of Statistics shows that in the first half of this year, the total profits of industrial enterprises above a designated size nationwide grew by 18.7% year-on-year. Among these, the computer, communication, and other electronic equipment manufacturing sector saw profit growth of 96.9%, serving as a significant pillar for the rapid profit expansion of these larger industrial enterprises. Influenced by profit growth in certain sectors, corporate income tax, the second-largest tax category, reached 3.2769 trillion yuan in the first seven months, an increase of 7.2% year-on-year, according to Ministry of Finance data.
The active trading in the stock market this year has also spurred rapid growth in the stamp tax on securities transactions. Additionally, some residents have seen increases in capital income from equity transfers, dividends, and similar sources, which has driven faster growth in individual income tax revenue. Ministry of Finance data reveals that stamp tax on securities transactions totaled 186.4 billion yuan in the first seven months, a substantial 99.2% year-on-year increase. Individual income tax amounted to 1.0662 trillion yuan, up 14.9% year-on-year.
This year, the total value of merchandise imports and exports has maintained double-digit rapid growth, which has correspondingly boosted related tax revenues. Meanwhile, the cancellation of export tax rebates for products like photovoltaics has slowed the growth of export rebates to some extent, also benefiting fiscal revenue. According to Ministry of Finance data, VAT and consumption tax on imported goods reached 1.1569 trillion yuan in the first seven months, a 12.3% year-on-year increase. Export tax rebates amounted to 1.48 trillion yuan, growing 5.2% year-on-year, a rate lower than the 9.7% recorded during the same period last year. Nevertheless, export rebates continue to grow, supporting the development of foreign trade.
The accelerated cleanup of tax incentive policies in recent years, with some expiring this year, has also contributed to fiscal revenue growth. For example, the vehicle purchase tax for new energy vehicles has shifted from a full exemption to a 50% reduction starting this year. With the rising penetration rate of new energy vehicles, vehicle purchase tax revenue has seen significant growth this year. Ministry of Finance data shows that vehicle purchase tax reached 133.7 billion yuan in the first seven months, a 13% year-on-year increase, significantly higher than the -18.4% recorded in the same period last year.
Furthermore, in recent years, tax authorities have deepened the implementation of a "foundation-strengthening project" for tax collection and management under digital transformation. Enhanced tax collection capabilities and improved corporate tax compliance have also benefited tax revenue growth. For instance, data from the State Taxation Administration shows that in the first half of this year, authorities nationwide investigated and dealt with various tax-related violations, recovering 180.6 billion yuan in tax losses, a 20.8% increase year-on-year. Tax authorities have also further regulated the management of overseas income tax for residents, guiding taxpayers towards lawful and honest tax payment. In the first half of this year, they urged the payment of approximately 34 billion yuan in back taxes and late fees.
Due to adjustments in the real estate market, some property-related taxes have seen significant declines. In the first seven months of this year, deed tax fell by 14.5% year-on-year. However, overall, tax revenue has maintained rapid growth this year, with its growth rate clearly outpacing that of non-tax revenue. Ministry of Finance data shows that non-tax revenue within national general public budget revenue reached 2.5315 trillion yuan in the first seven months, a modest 1.6% year-on-year increase.
Beyond the general public budget revenue, revenue from government-managed funds, primarily derived from land sales, serves as another crucial source of income for governments, especially local governments. However, due to the overall downturn in the property market, local land sale revenue has seen a marked decline this year, which to some extent exacerbates the fiscal revenue-expenditure imbalance for local governments. Ministry of Finance data indicates that in the first seven months, revenue from the national government-managed funds budget totaled 1.8219 trillion yuan, a 21.2% year-on-year decrease. Within this, revenue from state-owned land use rights transfers under the local government-managed funds budget amounted to 1.1731 trillion yuan, a significant 30.8% drop year-on-year. This decline is steeper than the -4.6% recorded in the same period last year and falls well short of the initial official forecast for the year.
On the expenditure side, China has implemented a more proactive fiscal policy this year, maintaining a certain level of fiscal spending and effectively ensuring funding for key areas such as people's livelihoods. Ministry of Finance data shows that in the first seven months, national general public budget expenditure reached 16.2889 trillion yuan, a 1.3% year-on-year increase. Notably, health expenditure grew by 9.8%, driven by increased outlays for child-rearing subsidies and subsidies for basic medical insurance funds; social security and employment expenditure rose by 7%; and housing security expenditure increased by 4%. Conversely, infrastructure-related expenditures, such as those for transportation and urban-rural communities, generally saw declines.
On August 21, Vice Minister of Finance Liao Min stated at a press conference held by the State Council Information Office that the Ministry of Finance has firmly implemented a more proactive fiscal policy this year. This includes focusing on front-loaded efforts and targeted measures, maintaining necessary fiscal expenditure intensity, emphasizing the close integration of investment in physical assets and investment in people, and leveraging the "leverage effect" of fiscal funds to provide strong support for the economy's continuous improvement in innovation, quality, and performance.
However, the growth rate of national general public budget expenditure in the first seven months (1.3%) is lower than the full-year target growth rate (4.4%). This is mainly attributed to the relatively low growth in local fiscal expenditure (0.5%), while central fiscal expenditure has maintained faster growth (6.2%). Going forward, local fiscal expenditure still needs to strengthen to support the smooth operation of the economy. Liao Min indicated that the next steps will involve reasonably accelerating the pace of fiscal expenditure, strengthening supervision over regions with persistently slow spending progress, and improving the efficiency of fund utilization. Related subsidy funds will be allocated and distributed promptly to accelerate the implementation of livelihood policies. "In the second half of the year, based on the macroeconomic situation, the Ministry of Finance will promptly plan and introduce pragmatic and effective incremental policies to provide strong support for achieving a qualitative improvement in the economy and a reasonable quantitative growth," Liao Min said.
Affected by the significant decline in land sale revenue, expenditure from the national government-managed funds budget totaled 4.541 trillion yuan in the first seven months, a 16.4% year-on-year decrease.