Revenue in China Grows, Into Government Coffers

By Gao Zitan, Epoch Times
September 15, 2010 11:30 pm Last Updated: September 15, 2010 11:30 pm

[xtypo_dropcap]A[/xtypo_dropcap]ccording to a fiscal revenue report released by China’s Ministry of Finance, for the first eight months of this year the fiscal revenue grew from 23.6% to 5.675 trillion yuan (approximately US$840 billion), a rate much higher than the 10 percent Gross Domestic Product (GDP) growth rate estimated by the Chinese Academy of Sciences.

While the government revenue growth rate in far exceeds the GDP growth rate, there seems to be little change in public welfare programs around the country. In August, the government spending on education grew 17.4 percent, still less than the government revenue growth rate.

China’s social security expenditure is around 12 percent of China’s GDP, but for all developed countries and some developing countries, this number is usually 30 percent higher, according to Yang Liangchu of the Research Institute for Fiscal Science at China’s Ministry of Finance, quoted by the Southern Weekend newspaper.

In some countries, more than half of government revenue is used on social security. He said China has a huge deficit in social security funding and needs to keep increasing its future investments in this area.

Having a government revenue growth rate much greater than GDP growth rates has been a common trend in China over recent years. According to the Ministry of Finance’s data, in 2007 the government revenue growth rate was 32.4 percent while the GDP growth rate was 13 percent; in 2008 it was 19.5 percent while the GDP growth rate was 9.6 percent; in 2009 it was 11.7 and 8.7 percent respectively.

This year, the total government revenue growth rate is expected to exceed 16 percent, which would far exceed the target GDP growth rate of 8 percent.

Discrepancy in the Numbers

According to a Wall Street Journal report, in August revenue from corporate income tax in China fell by 46.4 percent compared to last year, which indicates that businesses in China are not doing well.

The GDP is the measurement of a country’s total economic output. However, the government revenue continues to grow despite the tough business environment.

According to a Southern Weekend report, the budget published by China’s Ministry of Finance does not include income from government related funds, state owned enterprise dividends, and other non-budgeted income. If all the regimes’ government incomes are included as is usual in most countries, the actual government revenue in China should be much higher than the number published.

Read the original Chinese article