Business

China’s Tax Revenue Declines as Its Leaders Brace for Trump’s Tariffs

Published

8 months ago

March 21, 2025

China’s Tax Revenue Declines as Its Leaders Brace for Trump’s Tariffs

Buried in China’s latest government budget were some numbers that add up to an alarming trend. Tax revenue is dropping.

The decline means that China’s national government has less money to address the country’s serious economic challenges, including a housing market crash and the near bankruptcy of hundreds of local governments.

Weak tax revenue also puts China’s leaders in a box as they square off with President Trump, who has imposed 20 percent tariffs on goods from China and threatened more to come. Beijing has less spare cash to help the export industries that are driving economic growth but could be hurt by tariffs.

The drop in tax collections leaves China’s leaders in an unfamiliar position. Until the last several years, China enjoyed robust revenue, which it used to invest in infrastructure, a rapid military buildup and extensive industrial subsidies. Even as economic growth has slowed gradually over the past 12 years, taking a dent out of consumer spending, tax revenue held fairly steady until recently.

Tax revenue fell further last year than ever before. And the only two previous declines in recent decades were under special circumstances: In 2020, China imposed an essentially nationwide pandemic lockdown for a couple of months, and in 2022, Shanghai endured a two-month lockdown.

China’s declining tax revenue now has several causes. A big one is deflation — a broad decline in prices. Companies and now the Chinese government find themselves with less money to make monthly payments on their debts.

Since September, Chinese officials have promised several times that they were on the cusp of doing what practically every foreign and Chinese economist recommends: spending more money to help the country’s beleaguered consumers with such measures as higher pensions, better medical benefits, more unemployment insurance or restaurant vouchers. But again and again, including on Sunday, they have laid out ambitious programs without providing more than a smidgen of extra spending.

The usual explanation for the frugality lies in longstanding opposition from Xi Jinping, China’s top leader, who warned in a speech in 2021 that China “must not aim too high or go overboard with social security, and steer clear of the idleness-breeding trap of welfarism.”

But China’s 2025 budget, which the Ministry of Finance released on March 5, suggests a different explanation: The national government may not have the money. Despite record borrowing, it would be hard-pressed to find the money needed to stimulate consumption.

Overall tax revenue fell 3.4 percent last year. That might not look like a lot. But it is a sizable divergence from the overall economy, which according to official statistics grew 5 percent before being adjusted for deflation.

Falling tax revenue means that China’s budget deficits are widening not because of extra government spending to help the economy, but because there is less money coming into the till. The problem has been worsening for years at local governments, which have plummeting revenues from selling state land, and has spread to the national government.

Fitch Ratings calculates that overall revenue for the national and local governments — including taxes and land sales — totaled 29 percent of the economy’s output as recently as 2018. But this year’s budget indicates that overall revenue will be just 21.1 percent of the economy in 2025.

Roughly half of the decline comes from plummeting revenue from land sales, a well-documented problem related to the housing-market crash, but the rest comes from weakness in tax revenue, a new problem.

That adds up to a huge sum of money. If overall revenue had kept up with the economy over the past seven years, the Chinese government would have another $1.5 trillion to spend in 2025.

China announced this month that it would allow its official target for the budget deficit to increase to 4 percent this year, after trying to keep it near 3 percent ever since the global financial crisis in 2009. But analysts say the true deficit is already much larger, because China is quietly counting a lot of long-term borrowing as though it were tax revenue.

Comparing spending only with actual revenue, without the borrowing, the Finance Ministry’s budget shows a deficit equal to almost 9 percent of the economy. In 2018, it was only 3.2 percent.

“Deficits are quite high and debt is rising quite quickly, so they are fiscally challenged,” said Jeremy Zook, a director of Asia and Pacific sovereign ratings at Fitch.

The biggest taxes in China are value-added taxes, a kind of sales tax that the government collects on practically every transaction, from rent to refrigerators. Last year, revenue from value-added taxes fell short of expectations by 7.9 percent.

The word “deflation” is prohibited in official Chinese documents, so the ministry came up with a euphemistic explanation: “This decrease was mainly due to the fact that the producer prices were lower than expected.”

Producer prices, essentially wholesale prices calculated as goods leave factories and farms, fell 2.3 percent in China last year.

Revenue from value-added taxes began weakening in 2018. That was when the government cut these taxes sharply for exporters to help them offset the impact of tariffs imposed by President Trump in his first term.

The cost of that tax break has soared since then as China’s exports have surged, producing a trade surplus of almost $1 trillion last year even as the rest of the economy stagnated.

Another problem lies in falling salaries and rising layoffs, especially during the second half of last year. Income taxes collected from individuals were 7.5 percent below expectations last year, the Finance Ministry said in its budget.

China’s own steep tariffs on imports are another large source of revenue. But having lost much of their savings in the housing market crash, China’s consumers have cut back on purchases of imports like handbags and perfume, while prices have fallen for many imported goods. So revenue from customs duties was 9.2 percent below forecasts last year, the Finance Ministry said.

This year’s financial picture could be even worse than the budget anticipates. The Finance Ministry’s budget repeated many of the same optimistic assumptions about tax revenue and overall economic performance that it made last year.

Governments in the West derive considerable revenue from taxes on investment gains, inheritances and real estate. But China has no taxes on investment gains or inheritances and almost none on real estate.

The general lack of real estate taxes lies at the root of a separate problem: China’s local governments are also running out of money. Until recently, they derived up to 80 percent of their revenues from selling land to property developers.

But those sales have plummeted since the housing crash began in 2021, which has gutted demand for new apartments and bankrupted many developers.

Local governments are responsible for most pensions, medical benefits and other social spending in China. The national government has been selling extra bonds to raise money for bailing out the weakest local governments, many of which are behind on their debts. The national government has called for local governments to step up social spending but, short on cash itself, has offered scant new financial assistance.

And new taxes are not likely forthcoming, according to Jia Kang, a retired research director at the Finance Ministry and still one of China’s most influential voices on tax policy. He said in an interview that public opposition to inheritance taxes is strong, while taxes on investment gains or real estate would hurt stocks or the housing market.

One factor not causing China’s tax challenges is fraud or tax evasion, Mr. Jia said. The procedures for checking on payments have become very detailed, he said. “It is difficult to cheat in this system.”

Siyi Zhao contributed research.

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Business

Amazon’s Zoox offers free robotaxi rides in San Francisco

Published

4 hours ago

November 18, 2025

Press Room

Amazon’s Zoox offers free robotaxi rides in San Francisco

Amazon-owned Zoox is offering free rides on its San Francisco fleet of boxy, driverless taxis.

The company said Tuesday it is providing the rides to people who download the Zoox app and join a waitlist. The sneak peek is part of a program in which riders provide feedback about the robotaxis before they become more widely available.

The preview shows that Zoox is moving closer to expanding its robotaxi service in San Francisco, a city filled with hundreds of self-driving cars from major rival Waymo. Zoox’s robotaxi service will be available in the SoMa, Mission and Design District neighborhoods.

“We have seen incredible interest in Zoox in this market and are excited about this first step to bring our purpose-built robotaxi experience to more people,” Aicha Evans, Zoox’s chief executive, said in a statement.

Headquartered in Foster City, Calif., the company has been testing autonomous technology in San Francisco since 2017. Zoox employees have been trying out the robotaxis, but this will be the first time the rides will be available to the general public in America’s tech capital. The company hasn’t said when it plans to start charging for its robotaxi service in San Francisco.

The robotaxi race has been ramping up in California, a hotbed for testing autonomous vehicles. Waymo, owned by Google parent company Alphabet, rolled out its service to highways and Bay Area airports. Ride-hailing company Uber teamed with Lucid Group and Nuro to launch robotaxis in the San Francisco Bay Area next year. Tesla said it would start testing robotaxis with drivers in the Bay Area.

Zoox’s boxy, aloe green vehicle, described by some people as a “toaster on wheels,” looks different from its rivals. Designed to fit four people, the electric vehicles don’t have a steering wheel or pedals and the doors slide open and closed. While people face each other during the ride, some who have tested the vehicles reported feeling motion sickness from moving backward. The robotaxis include wireless charging, an emergency call button and a touchscreen to control the music and the vehicle’s temperature.

The company has a fleet of about 50 robotaxis across San Francisco and Las Vegas. In September the company started allowing the public to hail its robotaxi service around the Las Vegas Strip. Zoox opened a massive facility in Hayward, Calif., and said it will be able to assemble more than 10,000 robotaxis a year as demand for its services grows.

People are using self-driving vehicles more, but robotaxis also have ignited concerns about job loss, safety and privacy. Santa Monica residents have complained about the beeping noises from Waymos. In San Francisco and Los Angeles, people have vandalized the cars and set them on fire. And after a Waymo ran over KitKat, a beloved cat, San Francisco residents have expressed more safety concerns about self-driving taxis.

Some companies have failed to launch robotaxis. Last year automaker General Motors shuttered the development of its Cruise robotaxis, citing high costs and increased competition. Cruise lost the permits it needed to continue testing in California because of public safety risks after a woman was dragged underneath one of its robotaxis in San Francisco.

Zoox issued voluntary software recalls to address potential safety concerns. In May an electric scooter rider in San Francisco sustained minor injuries after the person struck an unoccupied Zoox vehicle that braked at an intersection. When the rider fell next to the robotaxi, it began to move but then stopped. The company said in a blog post it updated its software to improve how it tracks nearby pedestrians and prevent movement when a person is very close to the vehicle.

The amount of time it will take to get off the waitlist in San Francisco will depend on demand and the availability of its robotaxis. Zoox said there isn’t a limit to how many people can join the waitlist, but it aims to remove it next year.

The company also partnered with Tartine Manufactory, a popular bakery in San Francisco that’s well-known for its bread and pastries. Zoox posted on social media that people who download its app and sign up for the waitlist from Nov. 15 to 22 will be able to get a free pastry while supplies last.

Zoox has been testing its robotaxis in other major cities, including Los Angeles, Seattle, Austin and Miami. Tech giant Amazon bought Zoox in 2020 for more than $1.2 billion.

Business

Sinclair pursues a deal with Scripps to spark more TV station consolidation

Published

23 hours ago

November 17, 2025

Press Room

Sinclair pursues a deal with Scripps to spark more TV station consolidation

Television station owner Sinclair Inc. has taken an equity stake in fellow broadcaster E.W. Scripps, signaling its intent to become a behemoth in the shrinking field.

Sinclair disclosed its interest in Scripps, which owns stations in Fresno, Bakersfield, Buffalo, N.Y., and Billings, Mont., in a Securities & Exchange Commission filing Monday. Baltimore-based Sinclair, known for its conservative political bent, said it has acquired about 8% of Scripps’ equity by buying some of its publicly traded shares.

Sinclair disclosed that it has had “constructive discussions with [Scripps] for several months regarding a potential combination of the two companies.”

No deal has been reached.

Cincinnati-based Scripps, in a statement, suggested that it wasn’t interested in a tie-up with Sinclair, saying the Scripps board and management instead were “focused on driving value for all of the company’s shareholders through the continued execution of its strategic plan.”

“The board and management are aligned on doing only what is in the best interest of all of the company’s shareholders as well as its employees and the many communities and audiences it serves across the United States,” Scripps said.

Sinclair appears to be putting pressure on Scripps by making the stock purchases and the public disclosure. Scripps stock jumped 40% to $4.28 at the market close on Monday. The company is valued at about $363 million.

Sinclair shares also got a bounce, gaining 5% and closing at $16.87. The company’s market value is $1.2 billion.

Television station owners are hoping that President Trump and his appointments to the Federal Communications Commission will lift the government-imposed cap on broadcast ownership. Currently, stations are restricted from owning outlets that reach more than 39% of the U.S. population.

Sinclair currently owns or operates 185 television stations in 85 markets, according to its website.

FCC Chairman Brendan Carr has signaled a willingness to undertake a massive deregulation. The anticipated push has prompted a flurry of deals among broadcasters, who have seen their advertisers scatter and audiences decline as more consumers get their news through social media.

Sinclair, in its filing, made a nod to the changing political winds in Washington.

“Recent industry consolidation and intensifying competition reinforce [Sinclair’s] view that further scale in the broadcast television industry is essential to address secular headwinds and compete effectively with larger-scale big-tech and big-media players, as well as major broadcast groups,” Sinclair wrote.

In September, Sinclair prodded the Walt Disney Co. to punish late night host Jimmy Kimmel after the host made comments about the alleged gunman who was later arrested and charged with the murder of conservative activist Charlie Kirk in Utah. Sinclair owns several ABC affiliate stations and dropped “Jimmy Kimmel Live!” for more than a week.

Sinclair demanded that Kimmel make a “meaningful personal donation” to Kirk’s political organization, Turning Point USA.

But Sinclair’s campaign crumbled after Disney’s brass returned Kimmel to his late night perch — without making concessions that Sinclair had demanded.

Critics have pointed to the alleged harms of TV station consolidation, including fewer on-the-ground workers and journalists reporting on the communities where the stations are based.

Sinclair’s filing contradicted such arguments, writing that “greater scale will also strengthen broadcasters’ ability to sustain their vital public service role in producing local news.”

The filing said consolidating Scripps could produce “more than $300 million in expected annual synergies.”

“The proposed combination would be structured to require no external financing as the combined company would maintain each company’s respective debt and preferred capital structures,” Sinclair wrote in the filing. “The transaction would avoid significant refinancing costs while meaningfully reducing leverage through the realization of synergies and lowering future refinancing risk.”

In its 2024 annual report, Sinclair said its dozens of stations produced “more than 2,400 hours of live news coverage per week across its station footprint, in addition to our various digital, social and audio platforms.”

Sinclair said in Monday’s filing that it was “committed to constructive engagement with [Scripps] toward reaching a definitive transaction agreement,” and Sinclair would like to consolidate its fellow broadcaster “within nine to 12 months.”

Scripps took a defensive stance in response to Sinclair’s overture, saying in a statement that “the board will take all steps appropriate to protect the company and the company’s shareholders from the opportunistic actions of Sinclair or anyone else.”

Elsewhere in the local TV business, Texas-based Nexstar, the nation’s largest TV broadcaster, is seeking government approval for its $6-billion deal to buy rival broadcaster Tegna.

Business

Fire survivors can use this new portal to rebuild faster and save money

Published

2 days ago

November 17, 2025

Press Room

Fire survivors can use this new portal to rebuild faster and save money

People who lost homes in the Palisades and Eaton fires can now go online to pick vetted residential templates that could save them money and be ready as early as next year.

Builders Alliance, a nonprofit organization formed in response to the fires, on Friday launched a portal that offers survivors a selection of homes, filtered by lot size, price range and other preferences.

“We’re trying to create an ‘easy’ button for homeowners,” said Lew Horne, the chairman of Project Recovery, a group of academics and real estate industry experts who had created a road map for recovery.

Construction crews work on rebuilding a home and properties after the federal cleanup in Altadena on Sept. 10.

(Allen J. Schaben / Los Angeles Times)

Project Recovery’s March report — which was compiled by professors in the real estate graduate schools at USC and UCLA, along with the Los Angeles chapter of the Urban Land Institute, a real estate nonprofit education and research institute — said an alliance of builders could work together for economies of scale to speed up reconstruction and make it more affordable and predictable.

The web portal is the latest stop on the report’s road map. It makes it easy for those who lost their homes to choose among templates and pricing from builders who have been vetted by Project Recovery.

“We’re keeping a close eye” on the builders, Horne said. “Buyers are going to have a quality home at a quality price in a time frame they can count on.”

Horne is head of the Los Angeles chapter of the Urban Land Institute and president of real estate brokerage CBRE for Southern California. Other leaders of Project Recovery include Stuart Gabriel, director of the UCLA Ziman Center for Real Estate, and Richard Green, director of the USC Lusk Center for Real Estate.

Homeowners using the portal can match their address to home choices that include pre-designed turnkey residences at costs equal to or below average insurance proceeds, Horne said. Owners can also choose more custom builds.

The new Builders Alliance consists of 10 licensed homebuilders, ranging in size from small boutique firms to larger companies such as Richmond American Homes and Brookfield Residential.

Brookfield built more than 200 homes in the La Vina gated community in Altadena, 52 of which burned down, Chief Executive Adrian Foley said.

“Obviously, we were devastated by all of the loss that’s taken place here,” he said. “We wanted to lean in and do anything we could to help out.”

Foley said the consortium was devised to get large and small builders working together to “procure the right material costs and procure plans and specifications that would be appealing to the end user so we could collaborate to beat down costs, be more efficient, and hopefully drive a higher percentage of rebuilding.”

The consortium expects to complete some homes by the third quarter of 2026.

The foundation of the Builders Alliance portal is a digital representation that maps every residential parcel in the Palisades and Eaton fire areas. It uses AI technology and is powered by Canibuild, which provides site-planning software for the residential construction industry.

The portal’s map is trained on local zoning regulations and pairs each lot with extensive menus of designs and costs. Property owners enter their address and can filter options by preferences such as square footage, bedrooms, bathrooms and price.