It is rising to alarming levels for both investors and relevant officials. duty her China when included in the calculation o lending local and regional authorities of the country. According to Goldman Sachs, the total debt of the second economy. in the world is now 23 trillion. dollars, which corresponds to 126% of Chinese GDP. The reasons for its rapid growth are the collapse of land sales, a slowdown in the economy and an increase in spending that the government decides. Beijing to fight the pandemic, as well as the cost of consecutive and long-term lockdowns. Thus, the authorities of the country are guided by the introduction of a property tax, reducing the hypertrophied state and the sale of assets in order to reduce outstanding debt.

This issue was also raised by the President of the People’s Republic of China. Xi Jinping who called it a major problem for the country’s officials. However, it has also been a central topic of discussion at a large number of business conferences recently held in China, where government advisers and economists offered solutions to reduce the country’s debt and consolidate the country’s public finances. Among other things, it is proposed to introduce a property tax to stimulate government revenue. Former finance minister Lu Jiwei championed the idea, arguing that local governments “actually don’t have many other sources of tax revenue.”

China’s political leadership has been considering imposing a wealth tax for more than a decade, with the intention of introducing it nationwide to keep property prices down. The measure began on a pilot basis in Shanghai and Chongqing in 2011, and it was not until 2021 that the Chinese parliament approved the extension to more cities in the country. Again, it has not yet been implemented, as the crisis experienced by the Chinese real estate market for about two years has “frozen” the plan. At an economic conference in January, Mr. Lu stressed that the property tax could be a sustainable source of revenue for regional and local governments, while freeing local governments from having to sell land to generate income.

On the table is the reduction of the state apparatus and the restriction of bureaucracy.

According to Li Yang, her former adviser National Bank China, reducing the bureaucracy and various levels of government through “institutional reform” could help reduce the country’s debt.

As Mr. Lee, who is currently chairman of the National Institute of Finance and Development, a government think tank, said, this reform could include cutting redundant staff and adjusting government functions and would certainly face challenges. At present, China has five levels of government, headed by the central government, followed by the authorities of 31 regions, and then the authorities of hundreds of cities and the last tens of thousands of localities. And, of course, the country’s bureaucratic system is constantly criticized for inefficiency, as well as extra staff that burden public finances.

However, this is not the first time that the issue of reducing the state apparatus is being considered. In a campaign that began in the 1990s, China cut staff in nearly 10,000 cities by merging services and laying off more than 86,000 employees. But again, according to 2016 data, there were 7.19 million civil servants in China, of which about 200,000 were hired in the same year. And finally, the authorities are considering the possibility of selling assets to pay off debts. China’s infrastructure investment, which can serve as an indicator of the value of its assets, has cost $27 trillion. dollars by 2021, according to Zhao Suxiang, an analyst at Orient Securities.