China’s Fiscal Engine Falters as Land Sale Revenues Plummet

China’s fiscal revenue fell 1.7% in 2025, the first contraction since 2020, reaching 21.6 trillion yuan—essentially unchanged from 2023 despite nominal growth targets. The slowdown coincides with a prolonged property slump and weak domestic demand.

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Beijing long funded budgets by selling land. In 2021 land sales yielded 8.7 trillion yuan, but by 2025 that amount dropped to 4.15 trillion yuan, a decline of over 50%. The first four months of 2026 saw land-sale revenue fall another 27.2% year-on-year to 680 billion yuan.

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Value-added tax still supplied nearly 40% of revenue, while corporate and personal income taxes added 32%. Tax revenue rose only 0.8% in 2025, whereas non-tax income fell 11.3%. Stamp-tax from securities transactions surged 57.8% amid a stock-market rally. Government spending rose 1% to 28.7 trillion yuan, widening the gap between collections and outlays.

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The erosion of land-sale income removes a major source for infrastructure, schools and local budgets. With expenditures outpacing revenue growth, the fiscal gap may pressure sub-national governments and limit Beijing’s ability to sustain its targeted 5% growth, which economists say now relies more on exports than on consumption.

WION

• "China’s fiscal engine is sputtering, and Beijing’s own numbers show why." — WION analysis

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• "Nearly 40% of that came from value-added tax alone, with corporate and individual income taxes adding another 32%." — WION analysis

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• "In 2021, land sales alone generated 8.7 trillion yuan, or nearly $1.3 trillion." — WION analysis

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• "By 2025, that figure had crashed to just 4.15 trillion yuan, a fall of more than 50%." — WION analysis

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• "Stamp tax revenue from securities transactions surged 57.8%, buoyed by a stock market rally." — WION analysis

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