China’s Tax Revenue Sees First Positive Growth of October 2024

China’s tax revenue growth returned to positive territory in October for the first time in 2024, signaling a pickup in economic activity and stronger momentum for the world’s second-largest economy. Analysts attribute this positive shift to the recent policy package aimed at revitalizing the capital market and stabilizing the real estate sector.

Data from the Ministry of Finance reveals that China’s general public budget revenue, which includes both tax and non-tax revenues, grew 5.5% year-on-year in October, continuing a steady rebound. Tax revenue specifically saw a 1.8% increase compared to the same month last year, marking the first positive growth since the start of the year.

China’s Tax Revenue Sees First Positive Growth of October 2024

Yang Zhiyong, president of the Chinese Academy of Fiscal Sciences, emphasized that this recovery in tax revenue indicates the economy is gaining traction, providing a solid foundation for continued growth. The policy measures to boost business confidence and economic activity are credited with driving the rise in tax collections.

One key factor was a dramatic rise in revenue from securities transaction stamp duty, which surged 2.52 times from October 2023, thanks to a rebound in stock market sentiment and increased trading volume. The decline in value-added tax revenue also narrowed to 1.2% in October, a significant improvement from earlier in the year.

Meanwhile, non-tax revenue has also surged. This category, which includes administrative fees, fines, and income from State-owned assets, rose by 15.3% year-on-year in the first 10 months of 2024, reaching 3.42 trillion yuan ($472 billion). October alone saw a 39.6% jump in non-tax revenue. Analysts predict that the overall non-tax revenue could surpass the budgeted target by around 500 billion yuan by the end of the year.

The strong growth in both tax and non-tax revenue is a sign of a steady economic recovery due to improving demand and corporate profitability.

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