Business
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.

Business
Sweetgreen’s CEO on Robots, RFK Jr. and Why Salads Are So Expensive

When Jonathan Neman was a student at Georgetown in the mid-2000s, he and some friends wanted to start a restaurant. A fast-food restaurant, but it would be healthy. And cool.
The documentary “Super Size Me” had made waves, and “we were going to be rejecting the fast food of the previous generation,” Mr. Neman said.
He and his business partners, Nicolas Jammet and Nathaniel Ru, opened the first Sweetgreen in 2007, on the edge of campus on M Street in Washington. As they expanded, they decided against franchising the brand, keeping control of every new location. Soon it became a buzzy millennial lifestyle brand. It sponsored an annual music festival. It went public in late 2021.
Sweetgreen now has more than 250 restaurants across the United States. The chain is known for its endlessly customizable salads — and for how quickly the cost of all those extra toppings and dressings can add up. (A recent lunch there cost me $16.28.)
The company also runs a growing number of locations that include what it calls the Infinite Kitchen, with salad-slinging robots that assemble bowls faster than human workers.
With great fanfare, Sweetgreen recently put fries on its menu — air-fried in avocado oil, to make customers feel better about adding a side of carbs to a salad. Much of its food is sourced locally, including avocados from California, which will limit the hit the company takes on tariffs, executives have told investors.
And Sweetgreen doesn’t cater just to office workers eating salads at their desks. Mr. Neman, 40, said he had heard that teenagers were “obsessed” with the salads, which wasn’t the case when Sweetgreen started. “The fact that they think that eating healthy is cool is something that we envisioned,” he said at his office in Los Angeles, where the company is now based.
Back in Washington, the Trump administration is also thinking about what goes into food. Health Secretary Robert F. Kennedy Jr., the standard-bearer of the “Make America Healthy Again” movement, recently declared that “sugar is poison” and pushed to ban artificial dyes in foods.
Some of those aims resonate with Mr. Neman, whose company worked with the former first lady Michelle Obama’s “Let’s Move” campaign. But he — like many other company leaders — is trying to talk about the company’s priorities (like eliminating seed oils) without being pulled into the polarized politics of the moment.
“We say we’re not red or blue, but we’re green,” he said.
This interview was condensed and edited for clarity.
Sweetgreen is all about healthy ingredients. Now, there is the “Make America Healthy Again” movement and R.F.K. Jr. pushing to ban artificial dyes in food. What are your thoughts on that?
As it relates to “Make America Healthy,” funny story: In 2016, during a festival, we had a campaign that was a joke, a play on “Make America Great Again.” We made “Make America Healthy Again” hats.
Wow.
We are on the team of anyone who wants to help make America healthier. Back in the days of the Obama administration, we partnered very closely with Michelle Obama.
With R.F.K. Jr., I’ll speak to the parts related to our world. I think bringing more transparency to our food system is great. I think some of those dyes are bad. Sweetgreen has never sold soda very intentionally. We’d make a lot more money if we did. A lot of people wish we did. We never have and I don’t think ever will.
We don’t like to get involved in the rest of it. So we’re not trying to insert ourselves politically, either me personally or as a brand.
Have you communicated with the White House about healthy foods?
We haven’t been directly involved at this point. But if there’s a place for us to help, we’re totally up for it.
There have been cuts at the Food and Drug Administration, which oversees food safety. Do you have any concerns around food safety in the U.S. right now?
I think some of the things I’ve seen could be a little bit alarming. Others seem great.
What are the things that concern you?
I’d want to be careful to have certain guardrails around food safety, for example. And to be careful that there are not any adverse impacts to moving too fast. But overall, I think more transparency around the food system, promoting more real food, getting rid of these artificial chemicals that are allowed in our food and removing any conflicts of interest in people that are regulating our food are all good things.
Let’s talk about the robots. Will they help with profitability?
Absolutely. So what we’ve seen is at the store level, the Infinite Kitchen adds at least seven points of margin. So if you look at our store, right now we’re about a 20 percent margin business. An Infinite Kitchen store should be at least seven points better.
So as more robots make more salads, can people expect prices to come down?
We are very conscious of making sure that Sweetgreen can be something for everyone. I think automation does give us a hedge as labor costs continue to go up, to be able to drive more value and offer that to our customer.
How much is too much to pay for a salad?
It really depends what you put in it. When you think about the cost of something, you have to sometimes think about the total cost. There’s the cost to you, but when you eat certain things, what’s the cost to your health? What’s the cost to the environment? People are paying not only for the quality of the taste in the food, but the fact that it’s made by hand, the fact that we pay our farmers and our team members fairly.
What’s your back story? Tell me about your parents and growing up in Los Angeles.
My parents immigrated here in 1979. They were Iranian Jews who came during the revolution. And that was a big part of my story growing up because I think about how fragile your life and reality can be.
I’m the oldest of four boys. Being Jewish is a big part of my identity. I’ve always been very connected to Israel and my Jewish faith and big family.
My dad has four siblings. They each have four kids, so 20 cousins. Shabbat every Friday. A lot of us Persian Jews came to Los Angeles during that time.
Entrepreneurship is really a part of the culture. Growing up, I knew very few people who worked for big companies. Everybody was a small-business owner in some way. My dad and his brothers worked together. They started a textile business.
I always knew I wanted to be in business. From a very early age my dad would take me to work with him. One of my earliest memories was that I’d want to put on a suit — because he put on a suit — and go to his factory and walk around.
You had this great network of entrepreneurs during the start-up process. Were you calling your dad?
I had a lot of mentors in the community, including my dad. Always was and still is. I always give my dad a lot of credit because I don’t think he expected me to go to Georgetown and then to, like, start a little salad shack.
What was it like to be an entrepreneur in Washington at that time?
Entrepreneurship has become a lot sexier over the past 20 years. At the time, especially at Georgetown, that wasn’t the culture. The cool thing was going to get a job in government or consulting or banking.
I got accepted to what I thought was my dream job, at Bain & Company, the consulting firm.
I would have had to leave D.C. The restaurant was up and running. I spoke to my partners, like what should I do? Should I stay? Should I go? They’re like, “It’s one restaurant now. Why don’t you go and get these skills and then see what happens?” I went and realized consulting wasn’t really for me, especially after being an entrepreneur.
Finally, it was actually a conversation with someone at Bain. I always remember this conversation because he’s like: “Listen, you have two big opportunities to take huge risks in your life. One is now. The other is after your kids are out of school. You don’t have anything to worry about right now.”
I remembered this phrase: “You can’t fall from the floor.”
Time for the lightning round. Do you have any secret Sweetgreen menu tips?
The big unlock to the secret menu is the mixing of dressings. Putting two together, like spicy cashew with a green goddess. You have this whole different experience.
Do you use A.I.? If so, what was the last question you asked a bot?
I do use A.I. a lot. The last thing I did was not a work thing. It was personal. I have two kids, a 2-year-old and a 4-year-old. I put a picture of them in and asked what they’re going to look like when they grow up. It has blown my mind because I can’t unsee it now.
What other C.E.O. do you admire?
I’d always looked up to Howard Schultz. I think what he did at Starbucks was amazing.
Do you work on a plane, or do you zone out?
I work a lot on the plane. It’s this amazing quiet time where I can do a lot of the work that I can’t do day to day.
How do you sign off your emails?
Usually just “JN.” If it’s a more inspirational message, I’ll write, “Onward.”
Business
Elon Musk's conflicts of interest: $2.37 billion in potential federal penalties, report says
Elon Musk and his companies faced at least $2.37 billion in potential federal fines and penalties the day President Trump took office, according to a congressional report released Monday that highlights the possible conflicts of interest posed by the billionaire’s cost-cutting work in government.
The 43-page memo by the minority staff of the Senate’s Permanent Subcommittee on Investigations, led by Sen. Richard Blumenthal (D-Conn.), is the most exhaustive attempt yet to detail Musk’s alleged conflicts as an advisor to Trump and chief promoter of his team called the Department of Government Efficiency, or DOGE.
Based on publicly available documents, media reports and the committee’s own calculations, the memo found that as of Jan. 20, Musk and his companies were “subject to at least 65 actual or potential actions by 11 different federal agencies” and that 40 of those created $2.37 billion in potential liabilities.
“Mr. Musk has taken a chainsaw to the federal government with no apparent regard for the law or for the people who depend on the programs and agencies he so blithely destroys,” the memo stated. “The through line connecting many of Mr. Musk’s decisions appears to be self-enrichment and avoiding what he perceives as obstacles to advancing his interests.”
The memo notes that Musk’s companies have received more than $38 billion in government contracts, loans, subsidies and tax credits going back more than 20 years. And it notes that SpaceX, as of Friday, had $10.1 billion in federal contracts.
“President Trump could not have chosen a person more prone to conflicts of interest,” states the memo, which calls on the president, executive departments and regulatory agencies to “take coordinated action to address Elon Musk’s threat to the integrity of federal governance.”
In a statement, White House Communications Director Steven Cheung said the claims were baseless.
“Mr. Musk has never used his position for personal or financial gain, and any assertion otherwise is completely false and defamatory. Dick is clearly suffering from a debilitating and uncurable case of Trump Derangement Syndrome,” Cheung said.
Blumenthal signed letters sent Sunday to Tesla, SpaceX, Neuralink, The Boring Co. and x.AI Corp. — Musk’s artificial intelligence company, which acquired his social media platform X Corp. — demanding more information about any federal investigations, litigation and regulatory actions involving each company.
The letters also requested to know what measures they had taken to deal with any possible conflict of interest involving Musk, who has majority stakes or controlling interests in the companies.
None of the companies immediately responded to emails for comment, nor did DOGE.
Musk has previously stated in a joint interview with President Trump on Fox News, that he would “recuse myself if it is a conflict,” while the president said, “He won’t be involved.”
Last week, Musk also said during a Tesla earnings call that he was stepping back from DOGE to focus on his electric car maker, though he would remain involved with the cost-cutting effort likely through Trump’s entire term.
The once-cutting-edge Austin, Texas, company has seen its profit and share price plunge amid Trump’s looming tariffs that Musk has opposed and a brand crisis precipitated by his prominent role in the administration.
The committee’s memo found that Tesla created most of the potential penalties for Musk — a cumulative $1.89 billion — due to investigations, lawsuits and other issues involving eight agencies.
The largest single liability was a potential $1.19-billion fine due to a reported criminal investigation opened by the Department of Justice into allegedly false or misleading statements made by Musk and the company about its Autopilot and Full-Self Driving Features since as early as 2016.
The Times previously reported the National Highway Traffic Safety Administration is probing the Full-Self Driving technology after reports of four collisions in low-visibility conditions, including one in which a pedestrian was killed.
However, doubts have been raised about the Justice Department’s commitment to any prosecution. The memo notes that in February the department dismissed a lawsuit it filed against SpaceX for allegedly discouraging asylum seekers and refugees from applying for jobs or hiring them because of their citizenship status. It calculated the lawsuit could have exposed SpaceX to $46.1 million in liabilities.
The second single largest liability of $462 million facing Musk also involved Tesla. It arose out of a 2023 lawsuit filed by the Equal Employment Opportunity Commission for the company’s alleged toleration of widespread racial harassment of Black employees at its Fremont, Calif., factory. Tesla has denied the allegations. In January, Trump fired two Democratic commissioners and the agency’s general counsel.
A third major potential liability of nearly $240 million involving the company stemmed from a media report that the company was subject to a Securities and Exchange Commission investigation due to a whistleblower claim that it didn’t disclose fire risks posed by its solar panel systems.
The other large potential liability, according to the memo, involved Neuralink, a company developing a brain-computer interface that allows paralyzed people to communicate via their thoughts or brain waves.
The memo notes the SEC opened an investigation into the Fremont, Calif., company after Musk allegedly overstated the safety of its implants while raising some $240 million from investors. A physician’s group filed a complaint that the implants had caused the deaths of at least 12 monkeys.
Neuralink has said it is committed to treating test animals humanely.
Another major alleged liability noted in the report involves a complaint the SEC filed against Musk accusing him of failing to make a timely disclosure in 2022 that he had acquired a 5% stake in Twitter.
The agency estimated Musk saved an estimated $150 million from unsuspecting investors unaware of this as he built up his stake in the company he ultimately acquired and renamed X. Musk has criticized the lawsuit, which is pending.
Other potential liabilities faced by Musk’s companies include a $633,000 fine the Federal Aviation Administration levied against SpaceX in September for alleged license violations during two Florida launches of its rockets. The agency said the case remains open.
Three of Musk’s companies also face allegations they violated Occupational Safety and Health Administration regulations, including 26 violations contested by Tesla creating $583,000 in liabilities, according to the memo.
With Republicans in control of the Senate, the Democrats on the investigations committee have minimal power, since they can’t hold hearings or subpoena witnesses. The committee has previously requested information from Musk’s companies on potential conflicts of interests, but Blumenthal said it hasn’t gotten a satisfactory response.
This memo calls on Trump and his administration to respond to congressional information requests regarding Musk’s “federal entanglements,” conduct reviews to ensure “appropriate measures were/are in place to prevent undue influence” and “initiate independent audits of major contracts and awards to Musk-affiliated companies, particularly those with Department of Defense and NASA.”
“No one individual, no matter how prominent or wealthy, is above the law. Anything less than decisive, immediate, and collective action risks America becoming a bystander to the surrender to modern oligarchy — public power in private hands,” the memo concludes.
Business
Titanic Survivor’s Letter, Written Aboard the Ship, Sells for Nearly $400,000

Days before the Titanic struck an iceberg, a first-class passenger, Col. Archibald Gracie, described the vessel in a letter written while on board: “It is a fine ship but I shall await my journey’s end before I pass judgment on her.”
Colonel Gracie’s journey on the Titanic had a catastrophic end, but he fared better than most.
He was on the top deck of the ship, gripping a railing, as it plunged into the sea. He said he was “swirled” under water before he got to a raft, where he spent hours floating on icy waters before being rescued.
The letter he wrote was sold on Saturday at an auction for $399,000 (or 300,000 pounds), according to Henry Aldridge and Son, an auction house in Wiltshire, England.
The auction house said the letter, written in neat, cursive handwriting, was addressed to an unidentified European ambassador, the great-uncle of the seller. The letterhead shows a triangular red flag with a white star and is printed with the words “On board R.M.S. Titanic.”
The letter was dated April 10, 1912, the day the ship set sail from Southampton, England. On April 12, it was postmarked in London, where it was received at the Waldorf Hotel. The Titanic struck an iceberg just before midnight on April 14 and sank the next day.
The buyer of the letter was based in the United States, according to Andrew Aldridge, the managing director of Henry Aldridge and Son. The auction house did not publicly identify the buyer or the seller.
Mr. Aldridge said in an email that the stories of the ship’s passengers “are told through the memorabilia” and that “their memories are kept alive through those items.”
The auction house had initially expected the letter to sell for up to 60,000 pounds, or nearly $80,000.
Colonel Gracie, a graduate of the United States Military Academy at West Point, was a high-profile survivor of the Titanic disaster, in which about 1,500 people perished.
He died eight months later, in December 1912, of complications from diseases, but his doctors and his family said that the real cause was that he had never recovered from the shock of the Titanic disaster, according to The New York Times.
After Colonel Gracie was rescued, he began work on “The Truth About the Titanic,” a book about his experience that was published posthumously. The New York Times review of the book said “there is something effective in the very lack of directness and coherency in the narrative.”
Colonel Gracie said in an interview with The New York Tribune that he had been on the top deck of the ship when it was hit by a wave that sent other people overboard. He managed to stay on and grabbed a brass railing.
“When the ship plunged down, I was forced to let go, and I was swirled around and around for what seemed an interminable time,” he said. “Eventually I came to the surface to find the sea a mass of tangled wreckage.”
He said he grabbed a wooden grating and then saw a canvas-and-cork raft. He made it onto the raft and began trying to rescue others. They eventually reached a rescue ship, R.M.S. Carpathia.
“The hours that elapsed before we were picked up by the Carpathia were the longest and most terrible that I ever spent,” Colonel Gracie said, according to The Tribune. “Practically without any sensation of feeling because of the icy water, we were almost dropping from fatigue.”
Colonel Gracie was an established figure in New York and Washington society.
His father had been an officer in the Confederate Army during the Civil War. Colonel Gracie was also a descendant of Archibald Gracie, who built the New York City mayor’s official residence, Gracie Mansion, in 1799.
After news of the Titanic’s sinking reached the United States, and it was not known whether Colonel Gracie had survived, his wife, Constance Schack Gracie, was reported missing for unrelated reasons.
Mrs. Gracie had not been on the ship, but had left town to avoid being subpoenaed in the lunacy trial of another society woman, Mary E. Gage, according to The New York Times.
In the days after the Titanic disaster, the Gracies’ daughter, Edith Gracie, was asked about the whereabouts of her mother, which she said she did not know, and about the fate of her father, The Times reported.
She said Colonel Gracie had been in Europe recuperating from an operation and had said in a letter that he would return home with a much stronger constitution.
“It is too terrible to think of,” she said, “but I am hoping against hope that he has come through the perils of the accident without harm.”
-
News1 week ago
Harvard would be smart to follow Hillsdale’s playbook. Trump should avoid Biden’s. | Opinion
-
Politics7 days ago
Video: Hegseth Attacks the Media Amid New Signal Controversy
-
Culture5 days ago
New Poetry Books That Lean Into Calm and Joy Amid Life’s Chaos
-
News1 week ago
Maps: Where Do Federal Employees Work in America?
-
Technology1 week ago
Pete Hegseth reportedly spilled Yemen attack details in another Signal chat
-
Politics1 week ago
Pope Francis and US presidents: A look back at his legacy with the nation's leaders
-
World1 week ago
New Zealand’s minor gov’t party pushes to define women by biological sex
-
Politics1 week ago
JD Vance has ‘exchange of opinions’ on issues like deportations during meeting with top Vatican official