China's Fiscal Crisis Unveiled: Government Faces Bankruptcy as Tax Burden Soars and Deficit Explodes

As of June 2024, China's fiscal situation is dire, with the government nearing bankruptcy. Unlike GDP data, fiscal revenue and expenditure figures are hard to manipulate, reflecting the true economic state. Data from tax, customs, and non-tax revenues are aggregated by the Ministry of Finance, and discrepancies in this data can lead to significant issues. The fiscal deficit has been rising sharply since 2018, escalating from 2 trillion yuan to over 8 trillion yuan in 2020, and remains high. This year, the fiscal deficit reached 3.65 trillion yuan in the first half, with projections indicating it could surpass 9 trillion yuan by year-end. The government’s strategy to manage this involves aggressive tax collection and issuing new bonds, absorbing financial system resources and leaving the stock market with no new capital. Historical patterns suggest the government will continue to exploit ordinary citizens for revenue, showing little concern for public welfare.
Connect with me:

[JJFrance]

Best analysis of China is on this channel. Thanks.

[stephenconnors]

It's gonna be real interesting when the internal security forces don't get paid.

[Dan]

Your analysis on China's fiscal data is great. You presented your data and explained them clearly to non-economists like myself. Thank you.

[markfischer]

I get the same order of magnitude for China's income, 17 trillion dollar claimed GDP, GNI/GDP ratio 0.5 (2018 data) and PPP 4.0. Bankrupt doesn't begin to describe it. 300 percent debt to GDP ratio is 51 trillion dollars but actual debt could be much higher, even 100 trillion dollars. I see no way out. A problem with no solution.

[RickBlaine]

I'm amazed there are no references to Gordon Chang's book "The Coming Collapse of China"!

[shubus]

I'm surprised the Ministry of Finance's data is not declared a State Secret and hence made unpublishable.

[jamesmustin]

When you control the news just report stellar news and print more money

[jpx]

This preference of the CCP to kick the can down the road has been apparent since the real estate market disconnected from reality with the prepayment for unbuilt condos on CCP land sold to people who bought the "air rights" as investments never intending to live in the future condos and with no ability to rent the potential condos. The analogies to the Dutch frenzy in pre-selling tulips is comedic.

[brmnyc]

So, money's tight? Hmm, I wonder what it costs to build aircraft carriers, "stealth" fighter jets, and sending rocket trips to the moon? Asking for a friend.

[Jin-omjz]

Thank you so much Don. Always appreciated!

[simony]

Each time when you said China bankrupt, I am so elated cos I known its your country that is bankrupt and not China.

[ivohahn]

This is an impressive (comprehensive, factual, fair and well presented) video about the dire financial situation of the PRC. Well done!

[powershift]

Extremely informative video Don, thank you for your time and effort.

[mombaassa]

The 30 year audits, will have a negative effect on China's attempts to encourage spending and lift economic activity. In the face of possible fines, companies will be saving every cent rather than embarking on new investments.

[philippayne]

Why would anyone buy Chinese government bonds. It will be like throwing money down the drain.

[luminyam]

This is actually terrifying. I think things are going to get worse. Stagflation is deadly.

[nomobobby]

6:45 So the best guess we have is roughly 5-6% contraction across the entire board? Seems too little for all the issues I've seen. Do you think the economy has burned through all the reserves and now we're seeing the true effects of trade wars and the one child policy?

[Eric-jouh]

Don’t worry, the chalets in Switzerland are all paid for and fully stocked.

[cyberslim]

Direct complains to local officials, means: Get picked up and thrown in prison until paying up...

[parrotraiser]

Canada's government should listen to this, but won't.