Declining Chinese Tax Revenue Confirms The Slowdown Everybody Fears

Recently, lots of doubts have been raised about the accuracy of official economic measures released by China’s government. I don’t doubt that the quality of much of the data is questionable. We regularly update our China chart book and try to assess the big picture as best we can using all the available data as a whole.

We are constantly on the lookout for more data to add to our chart book. I recently asked one of my colleagues to work on China’s official tax revenues. He found the latest official release in Chinese and used Google’s translation utility to read it. He ran a chart showing tax revenues in yuan during H1-2012. A second chart shows the y/y growth in revenues during H1-2012 versus during H1-2011.

The data were released by the Ministry of Finance on Tuesday of this week and outlined in a story appearing in the English version of The data confirm a significant slowdown in Chinese economic growth during the first half of this year:

(1) Tax revenues rose only 9.8% y/y during H1-2012, down from 29.6% over the same period a year ago. Growth rates were down across all 11 major revenue sources.

Tax rev

Photo: Ed Yardeni

(2) Personal income taxes actually declined 8.0%. A year ago, they rose 35.4%. Corporate income taxes rose 17.3%, but that was down from 38.3% a year ago.

Chinese tax revenue YOY

Photo: Ed Yardeni

(3) Revenues from property transactions took a hit. The ones from “Land Value Increment” rose 14.7% vs. 91.1% a year ago. “Deed” revenues fell 9.9% after rising 27.5% a year ago.

Today’s Morning Briefing: The Best & the Brightest. (1) Weill, Greenspan, and Blankfein have seen the light. (2) Bair is flabbergasted. (3) The Great Barofsky. (4) Other Peoples’ Money. (5) Capitalism’s weakest link. (6) Geithner’s turn to come clean. (7) Nowotny’s golden opportunity? (8) Don’t bank on bank stocks. (9) Europe has very good Health Care for investors. (10) China’s tax revenues confirm slowdown. (More for subscribers.)

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