China mulls a bold test of taxation without representation
中国考虑大胆测试无代表税收

CHAIRMAN MAO ZEDONG was a fan of meetings. “Whenever problems arise, call a meeting,” he wrote in 1949. “Place problems on the table.” Otherwise, he warned, they can drag on for years. A tableful of problems now beset China’s economy, including deflation, debt distress and demographic decline. A property slump has eroded confidence and hurt the land sales that help finance local governments. China also faces growing opposition from trading partners, who are limiting what they sell and buy from a country they now count as a geopolitical rival.
毛泽东主席非常喜欢开会。 “只要出现问题，就召开会议，”他在 1949 年写道，“把问题摆到桌面上。”他警告说，否则的话，他们可能会拖延很多年。目前，一系列问题困扰着中国经济，包括通货紧缩、债务困扰和人口下降。房地产市场的低迷削弱了人们的信心，并损害了帮助地方政府融资的土地销售。中国还面临贸易伙伴日益强烈的反对，他们正在限制从他们现在视为地缘政治竞争对手的国家买卖商品。

In response, China’s rulers have finally called a big meeting. On April 30th they announced that the party’s central committee will hold its third plenary session in July, gathering together over 370 committee members and their understudies. The third plenum, one of seven full meetings held over a typical five-year term, is traditionally devoted to reform and the economy. The session in 1978 enshrined China’s turn towards the market, making it one of the most consequential meetings in history. The most recent gathering in 2018 was also significant, for better or worse, paving the way for Xi Jinping, China’s ruler, to serve indefinitely as president.
作为回应，中国统治者终于召开了一次大型会议。 4月30日，他们宣布党的中央委员会将于7月召开第三次全体会议，届时将有370多名委员和他们的代表参加。三中全会是典型的五年任期内举行的七次正式会议之一，传统上专门讨论改革和经济问题。 1978 年的会议标志着中国转向市场，使其成为历史上最重要的会议之一。 2018 年的最近一次聚会无论好坏都具有重要意义，为中国统治者习近平无限期担任国家主席铺平了道路。

The meeting in July will be more than six months later than usual. The long delay stirred some speculation that China’s rulers were divided about the country’s direction. But the procrastination might also have indicated the opposite: that China’s economic strategy is largely settled, leaving no urgent need for a plenum to resolve debates. Gabriel Wildau of Teneo, a consultancy, guesses the third plenum will be a “nothingburger”, reiterating Mr Xi’s ambition to refocus the economy on high-tech manufacturing.
7月份的会议将比平常晚了六个月以上。长时间的拖延引发了一些猜测，认为中国的统治者对国家的发展方向存在分歧。但这种拖延也可能表明了相反的情况：中国的经济战略已基本确定，并不迫切需要召开全会来解决争论。咨询公司 Teneo 的加布里埃尔·维尔道 (Gabriel Wildau) 猜测，三中全会将是一个“无意义的汉堡”，重申了习近平将经济重心重新转向高科技制造业的雄心。

But although the government’s economic aims appear largely settled, what remains unclear is how it will pay for them. Even as the state has become more intrusive in recent years, government revenues have retreated (see chart 1). In yuan terms, revenue declined by 2.3% in the first quarter, compared with a year earlier, the third quarterly fall in a row. That is the longest spell of falling revenues in data going back to 1990. At another big economic meeting in December, the party said it should plan a new round of fiscal and tax reforms. A third plenum could give those reforms more momentum.
但尽管政府的经济目标似乎已基本确定，但仍不清楚它将如何为这些目标买单。尽管近年来国家的干预力度加大，但政府收入却有所下降（见图 1）。以人民币计算，第一季度收入同比下降2.3%，连续第三个季度下降。这是自 1990 年以来收入下降时间最长的一次。在 12 月的另一场大型经济会议上，共产党表示应该计划新一轮的财政和税收改革。三中全会可能会给这些改革带来更多动力。

New sources of revenue are sorely needed. During China’s property boom, its local governments relied on land sales to supplement their budgets. But sales fell in value by over 13% last year and may never revive. The problem is not confined to property. The money flowing into China’s “general” budget (which excludes land sales and social-security contributions) exceeded 22% of GDP in 2015 but fell below 17% in the last four quarters. The erosion of China’s revenue base was one reason why the outlook for its credit rating was cut by Fitch, a ratings agency, last month.
迫切需要新的收入来源。在中国房地产繁荣时期，地方政府依靠卖地来补充预算。但去年销售额下降了 13% 以上，而且可能永远不会复苏。问题不仅限于财产。 2015年，流入中国“一般”预算（不包括土地出让和社会保障缴款）的资金超过GDP的22%，但在过去四个季度下降到17%以下。中国收入基础的侵蚀是评级机构惠誉上个月下调其信用评级前景的原因之一。

What explains this erosion? One answer is slowing growth and the government’s efforts to revive it. China’s previous prime minister, Li Keqiang, who served from 2013 to 2023, was something of a “small-government Keynesian” in his response to weak demand. Most Keynesians believe that economic downturns can be offset by bigger budget deficits. The rarer breed of small-government Keynesian prefers to increase the deficit by cutting taxes rather than raising spending. “China has led the way in slashing taxes and fees,” Mr Li boasted in his annual speech to parliament in 2018. He made similar boasts in his next five speeches, too.
如何解释这种侵蚀？答案之一是增长放缓以及政府为重振增长所做的努力。 2013年至2023年任职的中国前总理李克强在应对需求疲软时采取了某种“小政府凯恩斯主义”的态度。大多数凯恩斯主义者认为，更大的预算赤字可以抵消经济衰退。更罕见的小政府凯恩斯主义者更愿意通过减税而不是增加支出来增加赤字。 “中国在减税降费方面走在了前列，”李克强在2018年的年度人大演讲中吹嘘道。他在接下来的五次演讲中也做出了类似的吹嘘。

For now China can fill the gap between its spending ambitions and its diminished revenues by borrowing. Yields on its existing bonds are low. And in March it said it would issue new “ultra” long-term bonds in each of the next several years. By 2028, when another third plenum will fall due, China’s broad government debt could exceed 140% of GDP, according to IMF projections (see chart 2). That would exceed the figure for America, a country China often chides for fiscal irresponsibility.
目前，中国可以通过借贷来填补支出雄心与收入减少之间的缺口。现有债券的收益率较低。今年三月，该公司表示将在未来几年中每年发行新的“超”长期债券。根据国际货币基金组织的预测，到 2028 年，另一次三中全会即将召开时，中国的广义政府债务可能超过 GDP 的 140%（见图 2）。这将超过美国的数字，中国经常指责美国财政不负责任。

Over the long term, China’s government will need other ways to mobilise resources. The third plenum in 2013 highlighted plans for a new property tax (a recurring levy on the value of people’s homes). Political momentum for such a tax seemed to be building in 2021. But it dropped off the legislative agenda last year amid fears that it would worsen the property downturn. “The idea is now pretty clearly dead,” argues Andrew Batson of Gavekal Dragonomics, a research firm.
从长远来看，中国政府将需要其他方式来调动资源。 2013 年三中全会强调了新的财产税（对人们房屋价值经常性征税）的计划。此类税收的政治动力似乎在 2021 年正在形成。但由于担心这会加剧房地产低迷，该税收去年从立法议程中消失。研究公司 Gavekal Dragonomics 的安德鲁·巴特森 (Andrew Batson) 表示：“这个想法现在显然已经死了。”

The other obvious source of revenue is the income tax. In the G7 group of rich countries these taxes are a mainstay, contributing over 37% of tax revenues on average. In China they contribute only 8.5%. Most people pay nothing at all. According to Sebastian Beer and Daniel Garcia-Macia of the IMF, the bottom 70% of China’s population escape any obligation thanks to a generous basic deduction. For higher earners, the rate rises steeply. But only a tiny fraction pay the top rate of 45%.
另一个明显的收入来源是所得税。在七国集团富裕国家中，这些税收是支柱，平均占税收收入的 37% 以上。在中国他们只贡献了8.5%。大多数人根本不支付任何费用。国际货币基金组织的塞巴斯蒂安·比尔和丹尼尔·加西亚-马西亚表示，由于慷慨的基本扣除，中国底层 70% 的人口可以免除任何义务。对于高收入者来说，利率急剧上升。但只有一小部分人支付 45% 的最高税率。

Instead of progressive income taxes, China relies on a regressive alternative. It requires employees and their employers to make hefty contributions to various social-insurance funds, including pensions. In many parts of the country, the combined contribution rate is even higher than the G7 average. But because contributions are capped, they fall less heavily on the highest paid. As a consequence, China’s tax schedule looks less like a staircase, rising step by step with higher incomes, and more like the undulating Great Wall (see chart 3).
中国不采用累进所得税，而是采用累退税。它要求雇员及其雇主向各种社会保险基金（包括养老金）缴纳巨额缴款。该国许多地区的综合贡献率甚至高于七国集团的平均水平。但由于捐款是有上限的，因此对最高收入者的影响较小。因此，中国的税表看起来不像是随着收入的增加而逐步上升的楼梯，而更像是起伏的长城（见图3）。

China’s peculiar pattern of revenue-raising is not an accident. It reveals something about the character and limits of China’s authoritarian regime. Modern states are defined by their power to tax. Their fiscal apparatus noses into every corner of the economy. But as states penetrate society, society tends to penetrate states, as Changdong Zhang of Peking University has put it. Taxpayers demand accountability and a say in how their money is used.
中国独特的财政收入模式并非偶然。它揭示了中国威权政权的特征和局限性。现代国家的定义是其征税权。他们的财政机构渗透到经济的每一个角落。但正如北京大学张长东所说，随着国家渗透社会，社会也倾向于渗透国家。纳税人要求问责制和对如何使用他们的钱的发言权。

To avoid these social entanglements, China has remained a “half-tax state”, according to some scholars. It relies not on taking money directly from people’s pay cheques, but on land sales, contributions from companies and indirect taxation, such as value-added taxes. In this way it can disguise the fiscal burden it imposes. A smart king makes sure his “gifts are visible and his extractions are invisible”, according to the “Guanzi”, a Chinese philosophical text. The modern party has followed that ancient advice.
一些学者认为，为了避免这些社会纠葛，中国一直保持“半税国家”。它并不依赖于直接从人们的工资中获取资金，而是依赖于土地出售、公司捐款和间接税，例如增值税。通过这种方式，它可以掩盖其施加的财政负担。根据中国哲学著作《管子》的说法，聪明的国王会确保他的“恩赐是可见的，而他的提取是无形的”。现代政党遵循了这一古老的建议。

To extract more revenue, the IMF economists suggest that China gradually introduce a property tax and widen the reach of its carbon-emissions trading scheme. China could also increase the cap on social-security contributions, even as it lowers the contribution rate. More radically, the country could lower the basic deduction for income taxes from 60,000 yuan ($8,300) to 15,000. At that threshold, 80% of the population would pay something.
为了获得更多收入，国际货币基金组织经济学家建议中国逐步征收财产税并扩大碳排放交易计划的范围。中国还可以提高社会保障缴费上限，尽管会降低缴费率。更激进的是，国家可以将所得税基本扣除额从6万元人民币（8,300美元）降低到15,000元。达到这个门槛后，80% 的人会支付一些费用。

If China adopted these recommendations, it would move closer to becoming a full-tax state and making its extractions more visible. Such a transition would be fiscally prudent but politically risky. From the perspective of China’s ageing, authoritarian regime, the challenge is to figure out how to take more money from people without giving them more voice in return. ■
如果中国采纳这些建议，它将更接近成为全额税收国家，并使其提取更加明显。这种转变在财政上是审慎的，但在政治上却存在风险。从中国老龄化的独裁政权的角度来看，面临的挑战是如何从人们那里拿走更多的钱而不给予他们更多的发言权作为回报。 ■

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