China's Major Tax Problem
Economics Explained
00:00
China's Tax Collection Problem Is Really Three Problems
China operates off a central authority, but no single man or institution can oversee the operations of one point four billion people. China's local governments make most of their money by taxing businesses and selling off 20 to 70 year leases on their landholdings. This is a very significant revenue source because the real estate market in china is absolutely massive. The problem is that these governments are not allowed to issue bonds, and they don't start making land revenues till they sell off their land holdings. They have come up with what is called a local government financing platform - which is as dodgy as it sounds.
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