China’s Ministry of Finance reports that 28 provinces and separate jurisdictions now rely on Beijing to close budget shortfalls, a shift that signals deepening economic imbalances.
China’s Provinces Lean on Beijing as Budget Gaps Widen
Beijing collects all personal and corporate income taxes, securities trading levies and customs duties, while provinces depend largely on land appreciation taxes, which fluctuate with property markets.
Deputy Director General Tang Zaifu of the finance ministry’s budget department says the first‑quarter data show self‑sufficiency ratios slipping and dependency rising, despite his downplay of the trend.
Financial Gap Reaches Trillion-Yuan Levels
Beijing must fund half the budget needs of the 22 provinces under its control and an additional five jurisdictions, a commitment that will cost roughly 10.5 trillion yuan, more than one‑third of the central government’s total budget.
Shanghai, normally a fiscal powerhouse, posted a shortfall in the opening quarter for the first time since the pandemic, underscoring the breadth of the problem.
Zhejiang achieved a self‑sufficiency ratio just over 96 percent, while Shandong and Guangdong exceeded 70 percent, but many regions posted ratios well below 100 percent, indicating persistent deficits.
Structural Shifts Drive the Crisis
The 1990s tax‑sharing reforms assumed a booming property sector, but the ongoing property slump has eroded that assumption, leaving provincial budgets exposed.
China’s growth now concentrates in high‑technology sectors promoted by the “Made in China 2025” agenda, while broad‑based consumer spending and private‑sector investment have been squeezed.
These fiscal pressures reveal a narrowing economy that leans heavily on export‑oriented, state‑driven industries rather than balanced domestic development.
Views expressed are those of the author and do not necessarily reflect The Epoch Times.
