An interactive comparison of government revenue, taxation, intergovernmental transfers, and debt between China and the United States, with OECD context. Built to make US and China's fiscal structures accessible and their current fiscal stress legible.
By Jonathon P. Sine · Data from MOF, CBO, IMF, OECD, and others · 2024 data
A note on data sources and comparability ▾
Cross-country fiscal comparison requires choosing between strict accounting comparability and institutional realism. This site uses different source frameworks for different questions, and is explicit about which is which.
Headline fiscal totals (hero charts, expenditure/GDP time series): China uses the four-budget (四本账) framework codified in the Budget Law and reported annually by MOF to the NPC. The US uses BEA NIPA Table 3.1 "Government total receipts/expenditures" (FRED: W067RC, W068RC), which consolidates federal, state, and local government. Both are authoritative national consolidated fiscal measures that exclude gross government enterprise transactions. This is the pairing used by Lin (2022), Rhodium Group, and ChinaPower/CSIS for China; BEA NIPA is the standard measure for the US.
Tax composition: OECD Revenue Statistics for standardized cross-country tax-mix comparison. China data supplemented with MOF tax categories; US mapped from CBO and OECD. OECD totals differ from BEA because OECD includes compulsory social insurance as "tax" and uses a different boundary for government enterprise income.
Functional spending breakdowns: China uses MOF general budget functional categories only (¥28.5T), because the other three budgets lack published functional detail. The US uses CBO (federal) and Census Bureau (state/local) functional categories mapped to the BEA total. Both sides note this asymmetry.
Debt: China uses official government debt + IMF LGFV estimates for "augmented" debt. US uses CBO federal debt held by public. Both are clearly labeled.
Overview
China's Widening Fiscal Gap
Total government income vs. expenditure across all four budgets (四本账), 2011-2024
Income = tax + non-tax + social insurance premiums + land sales + SOE dividend remittances. Not just taxes.
Expenditure = general budget spending + fund budget spending + SI benefit payments + SOE capital outlays.
Total incomeTotal expenditure
Absolute (trillions ¥)
As % of GDP
Source: MOF annual fiscal reports. Shading darkens as the deficit widens. Income peaked at ¥38.9T / 34% of GDP in 2021 then fell as land sales collapsed; expenditure kept climbing. The gap is now ¥9.9T / 8% of GDP.
Comparison
United States: A Similar Story, Different Driver
Total government income vs. expenditure (federal + state + local), 2011-2024
Income = BEA NIPA "Government total receipts" (taxes + social insurance + fees, consolidated). Excludes government enterprise gross commercial revenue.
Expenditure = BEA NIPA consolidated total (federal + state + local, excl. government enterprise gross transactions).
Total incomeTotal expenditure
Absolute (trillions $)
As % of GDP
Source: CBO/Treasury (federal); usgovernmentspending.com (state/local). Shading darkens as the deficit widens. COVID pushed spending to 52% of GDP ($10.9T) in 2020. The 2024 gap is $2.1T / 7% of GDP, driven by entitlement growth and $0.9T in interest costs.
Government Revenue: The Full Picture
All government revenue streams, 2024. China is a unitary state: local governments have no independent tax legislation authority and collect taxes at rates and bases set entirely by Beijing (though they retain limited discretion to offer rebates, temporary exemptions, or elect not to collect certain minor local taxes within centrally defined parameters). The US is federal: states and localities set their own income tax rates, sales tax rates, and property tax assessments autonomously. China operates four parallel budgets (四本账); the US has federal + state/local.
China
Total: ~¥37.6T (~29% of ¥129.4T GDP)
General budget — tax revenue¥17.5T · C 46% / L 54%
46.5%
VAT 50:50 · CIT/PIT 60:40 central:local · consumption tax, customs 100% central · deed/property/land taxes 100% local
Social insurance premiums¥8.7T · 97% local
23.1%
Separate budget (社会保险基金). Collected locally; central regulates ¥0.25T for pension equalization. Total fund revenue ¥11.9T incl. ¥2.7T govt subsidies.
Government fund budget¥6.2T · 92% local
16.5%
Land-use-right sales: ¥4.9T (down 16% YoY, down 44% from 2021 peak of ¥8.7T). Almost entirely local revenue.
General budget — non-tax revenue¥4.5T · C 33% / L 67%
12.0%
SOE asset monetization, fees, fines. Surged 25% YoY — partly one-off central dept special proceeds.
SOE capital operations budget¥0.7T · C 33% / L 67%
1.9%
Dividends/profits remitted from state-owned enterprises.
United States
Total: ~$8.6T (~29% of GDP, BEA NIPA)
Federal income taxes (PIT + CIT)$2.9T
30.5%
Individual income tax $2.4T · Corporate income tax $530B. PIT includes pass-through business income.
Federal payroll taxes (Social Security + Medicare)$1.7T
17.9%
FICA: 6.2% + 6.2% SS (on first $168,600); 1.45% + 1.45% Medicare (uncapped). Funds trust funds.
State & local tax revenue~$2.5T
26.3%
Property taxes ~$800B · State income taxes ~$650B · Sales taxes ~$550B · Other ~$500B. States have independent taxing authority.
State & local non-tax revenue~$1.9T
20.0%
Hospital/university fees, utility revenue (TVA, municipal electric/water), lottery, licenses, fines, pension fund investment earnings.
Federal other (excise, customs, estate, fees)$0.6T
Key takeaway: Both governments collect 29-33% of GDP in total revenue. China ~29% (¥37.6T), the US ~29% ($8.6T, BEA NIPA). The composition is radically different. China depends on production-side taxes (VAT) and land sales for nearly half its revenue; the US depends on income taxes (PIT + payroll) for over half. China's land sale revenue (¥4.9T) has no US equivalent and has declined 44% since 2021, creating a ¥3.8T structural hole that no single reform can quickly fill. China's non-tax revenue surge in 2024 (+25%) was partly one-off measures to compensate.
China's Total Government Revenue as % of GDP, 1978–2024
All four budgets (四本账) stacked. Planned-economy revenue collapsed in the 1980s, the 1994 分税制 reform rebuilt it through new channels (land, social insurance), and those channels are now eroding. Sources: Lin, China's Public Finance (Cambridge UP, 2022), Fig. 2.4, p. 52 (1978–2019); MOF + Rhodium Group (2020–2024).
General fiscal (tax + non-tax)Extra-budgetaryGovt funds (mostly land)Social insuranceSOE capital
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
~41%
'78
~35%
'85
~23%
'90
~18% ← nadir
'95
~23%
'00
~27%
'05
~33%
'10
~35%
'15
~37% ← peak
'19
~34%
'21
~29%
'24
Extra-budgetary revenue was folded into the general budget after ~2010. Total government revenue has fallen ~8pp of GDP from 2019 peak, driven by land sales collapse (down ~4pp) and general fiscal decline (down ~3pp). Revenue is now back to mid-2000s levels relative to GDP, while expenditure obligations have grown enormously.
Tax Revenue, 1995–2024
Bar height = tax as % of GDP (left axis). Absolute ¥T shown above each bar. Tax/GDP peaked at 18.6% in 2012 and has fallen to 13.0%, reflecting deliberate tax cuts, the 2016 business-tax-to-VAT merger, and slowing growth. Source: NBS, MOF, Lin (2022) Table 2.1.
0%
5%
10%
15%
20%
¥0.6T
9.8%
'95
¥1.3T
12.5%
'00
¥2.9T
15.4%
'05
¥4.9T
18.3%
'07
¥7.3T
17.8%
'10
¥10.1T
18.6%
'12
¥12.5T
18.1%
'15
¥14.4T
17.4%
'17
¥15.8T
16.0%
'19
¥15.4T
15.2%
'20
¥17.3T
15.0%
'21
¥16.7T
13.8%
'22
¥18.1T
14.4%
'23
¥17.5T
13.0%
'24
Tax revenue = 税收收入 within general public budget. The gap between general budget revenue (~¥22T) and tax revenue (~¥17.5T) is non-tax revenue (¥4.5T), which surged 25% in 2024 as local governments scraped for revenue. Tax/GDP peaked at ~18.6% in 2012 and has since fallen to ~13%, driven by VAT cuts, PIT threshold increases (2018), and COVID-era relief measures.
US Total Government Revenue as % of GDP, 1965–2024
All levels of government (federal + state + local). Same y-axis scale as the China chart above. US total revenue has stayed in a narrow 27–36% band for 60 years. Source: OECD Revenue Statistics (tax/GDP, 1965–2023); usgovernmentrevenue.com (total); non-tax = fees, charges, government enterprise income (TVA, utilities, hospitals, universities, tolls, lotteries, etc.).
The contrast with China is stark. China's total revenue swung from 41% (1978) to 18% (1995) to 37% (2019) to 29% (2024), a 23pp range. US total revenue over the same period varied by just ~9pp (27–36%). US dips are cyclical (GFC, dotcom); China's are structural. Non-tax revenue has grown steadily as state/local government enterprises (utilities, hospitals, university tuition) expanded. The US has no equivalent to China's land sales or four-budget system.
Tax Revenue Composition: China vs. US vs. OECD Average
China: CY2024 MOF tax + social insurance premiums (¥26.2T). US all-gov: OECD 2022 shares on ~$7.3T. US fed: CBO FY2024 ($4.9T). OECD: 2022 avg shares.
Click any table row to expand comparability notes.
Note: China's SI sits in a separate budget (四本账). OECD counts it as tax. ¥8.7T is premium income only; total SI fund revenue incl. govt subsidies was ¥11.9T.
▸VAT / Sales & Excise
¥8.3T
31.7%
$1.1T
15.7%
31.6%
$98B
2.0%
Domestic VAT (¥6.7T) + Consumption Tax (¥1.7T) + Import VAT & CT (¥1.9T), net of export rebates (¥1.9T)
Note: China has a broad 13% VAT; the US has no VAT. China's share matches the OECD average; the US is the outlier.
▸Corporate Income Tax
¥4.1T
15.6%
$475B
6.5%
12.0%
$530B
10.8%
Enterprise Income Tax (企业所得税) at 25% standard rate
Note: If US pass-throughs were reclassified as corporate, US CIT would roughly double to ~11%, near the OECD average (12%).
▸Personal Income Tax
¥1.5T
5.5%
$3.3T
45.3%
23.6%
$2.4T
49.0%
Individual Income Tax (个人所得税), ¥60K/yr standard deduction, progressive to 45%
Note: The starkest contrast. US inflated by pass-through income. Even OECD avg (23.6%) is 4x China's share. See caveats 3–4 below.
▸Property & Land Taxes
¥1.9T
7.1%
$774B
10.6%
5.3%
—
—
Deed tax (¥517B) + Business property tax (¥471B) + Urban land use (¥243B) + Land VAT (¥487B) + Farmland occ. (¥137B)
Note: China has no recurrent residential property tax; its taxes are transaction-based. US property tax is annual on assessed value. Both above OECD avg.
Note: China has many minor taxes with no direct US equivalent. Stamp duty includes securities transaction tax.
▸Customs Duties
¥244B
0.9%
$77B
1.1%
incl. above
$77B
1.6%
Customs duties (关税). OECD includes customs in consumption taxes.
Note: Small in both systems. US share rising post-2018 tariff escalation.
Total
¥26.2T
100%
~$7.3T
100%
100%
$4.9T
100%
China = tax (net of ¥1.9T export rebates) + SI premiums
Key comparability issues
1. Social insurance now included. China's SI premiums (¥8.7T) are added to match OECD treatment of US payroll taxes. Without SI, China's PIT share of tax-only revenue (¥17.5T) is 8.3%.
2. Government fund budget. China's second fiscal account (政府性基金) brought in ¥6.2T in 2024, of which ¥4.9T was land-use-right sale proceeds. No US or OECD equivalent. Shown in Section 1 above but not in the tax composition table.
3. Pass-through income (single largest structural driver of the PIT/CIT gap). ~50% of US business income is taxed on individual returns via S-corps, LLCs, and partnerships. China has no equivalent election; virtually all significant business income flows through CIT at 25%. If reclassified as corporate, US PIT would drop from ~45% to ~40% and US CIT would roughly double from ~6.5% to ~11%. Most OECD countries also tax pass-through income via PIT, so the OECD average PIT share (23.6%) is similarly inflated relative to China.
4. China's PIT base is deliberately narrow. The ¥60K/yr standard deduction exceeds median urban disposable income (~¥40-45K), so most workers pay zero PIT. Six itemized deductions added in 2019 further narrowed the base. Capital gains on stock trades are fully exempt, bank deposit interest is exempt, and non-wage income collection is weak. These are policy choices.
5. US all-gov $ estimates. Derived from OECD 2022 shares applied to ~$7.3T (25.2% tax-to-GDP per OECD × ~$29T 2024 GDP). Approximate only.
6. Non-tax revenue excluded from tax table. China's non-tax revenue (¥4.5T, 20% of general budget) and US non-tax revenue (~$1.8T) are shown in Section 1 but excluded here.
Each bar = 100% of tax revenue by type. China's mix has been reshuffled twice (1994 reform, 2016 VAT merger). The US mix has barely changed in 30 years.
China: Lin (2022), Table 2.1 (1994–2019); MOF (2024). US: OECD Revenue Statistics (2024 edition, through 2022). China excludes social insurance (separate budget); US includes it per OECD. Key contrast: China's VAT surged from 25% to 39% in 2016 absorbing business tax; PIT never exceeded 9%. US PIT has never fallen below 36%.
Non-Tax Revenue: The Rise and Fall of Land Finance
State-owned land use rights sales grew from near-zero in the late 1990s to ¥8.7T at peak (2021), then collapsed by 44%. At peak, land sales equaled 23% of total government revenue (四本账). Source: MOF, NBS.
Bar height = % of all gov revenue (left axis)Absolute ¥T value shown above each bar
0%
5%
10%
15%
20%
25%
¥0.05T
3%
'98
¥0.05T
3%
'99
¥0.06T
3%
'00
¥0.13T
6%
'01
¥0.54T
15%
'03
¥0.59T
12%
'05
¥1.2T
16%
'07
¥1.0T
12%
'08
¥1.6T
17%
'09
¥2.8T
20%
'10
¥3.3T
19%
'11
¥2.9T
15%
'12
¥3.9T
18%
'13
¥4.3T
18%
'14
¥3.3T
13%
'15
¥3.7T
14%
'16
¥5.2T
17%
'17
¥6.5T
19%
'18
¥7.3T
20%
'19
¥8.4T
23%
'20
¥8.7T
22%
'21
¥6.7T
18%
'22
¥5.8T
15%
'23
¥4.9T
13%
'24
Source: MOF annual fiscal reports, NBS China Statistical Yearbook, China Land Resources Yearbook. Percentages cross-checked against Lan Xiaohuan, Embedded Autonomy (置身事内), Ch. 2, which reports land sales as share of local budget revenue (denominator differs). Land sales = 国有土地使用权出让收入. Denominator = total government revenue across all four budgets (一般公共预算 + 政府性基金 + 社会保险 + 国有资本经营). Pre-2010 figures are approximate. Bar height scaled to 25% max. The Wuhu model (1998) launched the LGFV era; the 2002–2003 rollout of centrally approved land auctions ignited the boom. See Sine (2024), "The Rise and Fall of LGFVs".
The arc of land finance: From ¥508亿 (1998) to ¥8.7T (2021) in 23 years, land sales became the single largest non-tax revenue source for local governments. At peak in 2020, land revenue equaled 23% of all government revenue (四本账). By 2024 it had fallen to 13%, a loss of ~¥3.8T from peak. Local governments sold residential land high to maximize one-off revenue and industrial land cheap to attract taxable enterprises. The whole model depended on continuously rising property values. When that stopped, the fiscal model broke.
Government Expenditure
Total government spending across all budgets, as % of GDP. Same y-axis scale (0-55%) for both countries. Absolute value above each bar. China includes general + fund + social insurance + SOE budgets; US includes federal + state + local.
China Total Government Expenditure as % of GDP, 2011-2024
All four budgets: general public budget + government fund budget + social insurance benefit payments + SOE capital operations. Spending surged from 33% of GDP (2011) to 42% (2020) then moderated to 37% (2024) as fund budget spending was constrained by falling land revenue.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
¥16.0T
32.7%
'11
¥17.8T
32.9%
'12
¥20.9T
35.1%
'13
¥22.9T
35.6%
'14
¥25.2T
36.6%
'15
¥27.3T
36.6%
'16
¥30.7T
36.9%
'17
¥34.9T
38.0%
'18
¥38.6T
39.1%
'19
¥42.2T
41.5%
'20
¥42.4T
36.9%
'21
¥44.4T
36.7%
'22
¥45.7T
36.3%
'23
¥47.5T
36.7%
'24
Source: MOF annual fiscal reports. Social insurance = benefit payments only (excl. govt subsidies). The 2020 spike reflects COVID spending across all budgets. The post-2021 decline in spending/GDP partly reflects the collapse in fund budget expenditure as special bond issuance couldn't fully replace lost land revenue.
US Total Government Expenditure as % of GDP, 2011-2024
Federal + state + local consolidated (BEA NIPA Table 3.1). US spending/GDP ranges 33-38%, with the enormous exception of COVID (2020: 43%). The structural upward pressure comes from entitlement growth (Social Security, Medicare) and interest costs.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
$5.9T
37.6%
'11
$5.8T
36.0%
'12
$5.7T
34.1%
'13
$5.9T
33.5%
'14
$6.1T
33.2%
'15
$6.3T
33.4%
'16
$6.5T
33.1%
'17
$6.8T
32.8%
'18
$7.0T
32.9%
'19
$9.2T
43.0%
'20
$9.8T
41.9%
'21
$8.9T
35.0%
'22
$9.8T
35.7%
'23
$10.4T
35.6%
'24
Source: BEA NIPA Table 3.1, "Government total expenditures" (FRED series W068RC1A027NBEA); GDP from BEA. Consolidated federal + state + local, excluding government enterprise gross transactions. The 2020 COVID spike was ~$2.2T in emergency federal spending. Spending/GDP returned to ~35% by 2022.
Where the Money Goes: China vs. US, 2024
China's spending is dominated by education, social security, and infrastructure. The US is dominated by healthcare (Medicare/Medicaid), pensions (Social Security), and defense. Interest costs are rising fast in both. Both sides show all levels of government for apples-to-apples comparison.
China general budget expenditure 2024 (¥28.5T)
Central + local, general public budget only. Excludes fund budget (¥10.1T), social insurance (¥10.7T), and SOE capital (¥0.3T) which lack functional breakdowns.
Education
¥4.21T (14.8%)
Central ~5% / Local ~95%
Social security
¥4.21T (14.8%)
Central ~33% / Local ~67%
Agriculture
¥2.70T (9.5%)
Central ~15% / Local ~85%
Urban/rural
¥2.17T (7.6%)
Central ~2% / Local ~98%
Healthcare
¥2.03T (7.1%)
Central ~10% / Local ~90%
Defense
¥1.67T (5.9%)
Central 100%
Debt service
¥1.29T (4.5%)
Central ~70% / Local ~30%
S&T
¥1.15T (4.0%)
Other
~¥9.2T (31.7%)
Source: MOF 2024年财政收支情况. General public budget only (central + local combined). Central/local splits from MOF budget execution reports and Lin (2022), Table 6.1. Social insurance (¥8.7T) is a separate budget.
US government spending 2024 (~$10.4T)
BEA NIPA consolidated total: $10.4T (35.6% of GDP). All levels of government, excluding government enterprise gross commercial transactions.
Healthcare
$2.2T (21.4%)
Federal ~70% (Medicare, Medicaid fed share) / S+L ~30% (hospitals, Medicaid state share)
Social Security
$1.46T (14.2%)
Federal 100%
Education
$1.25T (12.1%)
Federal ~8% (Pell, Title I, IDEA) / S+L ~92% (K-12, public universities)
Defense + vets
$1.2T (11.7%)
Federal 100%
Interest
$1.03T (10.0%)
Federal ~85% / S+L ~15%
Welfare
$0.50T (4.9%)
Federal ~70% (SNAP, SSI) / S+L ~30% (TANF, general assistance)
Transport
$0.30T (2.9%)
Federal ~35% (highway grants, FAA) / S+L ~65% (roads, transit)
Public safety
$0.25T (2.4%)
Federal ~5% (FBI, courts) / S+L ~95% (police, corrections, courts)
Other
~$2.1T (20.4%)
Source: BEA NIPA Table 3.1 total ($10.4T); functional shares estimated from CBO FY2024 (federal) and Census Bureau (state/local). Healthcare = Medicare + Medicaid fed+state + S+L hospitals. Education = fed grants + S+L K-12 and public universities. Interest = fed + S+L debt service. Welfare = SNAP, TANF, housing, SSI, unemployment (excl. Medicaid). Public safety is almost entirely S+L.
Evolution of China's Spending, 2007-2024
General public budget expenditure by functional category, absolute values. Bar height = total spending. Percentage of total shown inside each segment. Social security has overtaken education; debt service is the fastest-growing share.
Source: MOF annual 财政收支情况 reports (2020-2024); Lin (2022), Fig. 6.5 / Table 6.1 (2007-2019). Key trends: total spending grew 5.6x from ¥5T (2007) to ¥28.5T (2024). Social security rose from 10.9% to 14.8%, overtaking education. Debt service nearly doubled from 2.5% to 4.5%. Defense share fell from 7.1% to 5.9% despite absolute growth. "Other" includes transport, public security, S&T, environment, housing, and general administration.
Evolution of US Government Spending, 2007-2024
All-government spending (federal + state + local, net of intergovernmental transfers) by function. The COVID years (2020-21) saw massive spikes in "other" (stimulus checks, PPP, enhanced UI). Interest costs have surged since 2022 as rates rose. Healthcare and pensions drive long-run growth.
Source: BEA NIPA Table 3.1 (total); functional shares estimated from OMB Historical Tables and Census Bureau. Pensions = Social Security + S+L pension systems. Healthcare = Medicare + Medicaid + S+L hospitals. Education = fed grants + S+L K-12 and higher ed. Defense = military + veterans + foreign affairs. Interest = federal + S+L debt service. Other = protection, transport, general gov, environment, agriculture, energy, COVID-era emergency spending (PPP, stimulus). Totals match BEA NIPA consolidated series.
The Consequence: Widening Fiscal Deficits
China's combined fiscal deficit (general + fund budgets) by component, as % of GDP. Calculated from MOF fiscal reports. General budget central/local split uses official deficit target proportions. Fund budget split uses MOF 本级 revenue and expenditure data. Totals validated against Rhodium Group.
Central generalLocal generalCentral fundLocal fund
+2%
0%
-2%
-4%
-6%
-8%
-10%
+1.1%
2011
-0.1%
2012
-0.2%
2013
-0.6%
2014
-3.4%
2015
-3.8%
2016
-3.6%
2017
-4.7%
2018
-5.6%
2019
-8.6%
2020
-5.2%
2021
-7.4%
2022
-7.0%
2023
-8.1%
2024
Source: Author's calculations from MOF annual 财政收支情况 reports and NPC budget execution reports (2011-2024). General budget deficit = national revenue minus expenditure, split central/local using official budget deficit target proportions. Fund budget = 本级 revenue minus expenditure by level. Totals validated: 2020 = -8.6% (Rhodium ~-8.5%), 2024 = -8.1% (Rhodium ~-8.2%). Cf. Rhodium Group, China Financial Fiscal Decay (Feb 2026), Fig. 4.
Three phases: (1) 2011-2014: small general budget deficits offset by large local fund surpluses (green above the line) from booming land sales. Net position near balance. (2) 2015-2019: general deficit widens as spending commitments grow; land fund surplus vanishes. Total deficit reaches -5.6%. (3) 2020-2024: COVID blows open both the general deficit and the local fund deficit simultaneously. Even after the 2021 bounce-back, the local fund deficit (green below the line) stays large as land revenue never recovers. By 2024 the combined deficit is -8.1% with no structural fix in sight.
Who Collects vs. Who Spends
Revenue collection and expenditure responsibility by level of government, 2024. The gap between bars reveals the scale of intergovernmental dependence.
China
Revenue collection (general public budget)
Central: ¥10.0T (45.7%)
Central 46%
Local own-revenue: ¥11.9T (54.3%)
Local 54%
Expenditure responsibility (general public budget)
Central spending: ¥4.1T (14.3%)
Local spending: ¥24.4T (85.7%)
Local 86%
⬇
Vertical fiscal gap: Central collects 46% of revenue but does only 14% of spending. The gap is filled by ¥10.0T in transfer payments from central to local, plus local land sales (¥4.9T) and local non-tax revenue. Local governments are ~50% dependent on transfers from Beijing for their spending.
United States
Revenue collection (own-source, all taxes + non-tax)
Federal: ~$5.2T (57%)
Federal 57%
State & local own-source: ~$3.9T (43%)
State/local 43%
Expenditure responsibility
Federal spending: ~$6.8T (55%, incl. deficit spending)
Federal 55%
State & local spending: ~$4.0T (45%, after fed grants)
State/local 45%
⬇
Much smaller gap: Federal collects 57% and spends 55% (the rest is deficit-financed). Federal grants to states total ~$1.1T, roughly 20-25% of state/local revenue. State and local governments have genuine independent taxing authority (property tax, state income tax, sales tax), making them far less dependent on central transfers than Chinese local governments.
The real problem: spending outpaces all revenue sources combined. A common framing holds that the 1994 分税制 reform created a vertical fiscal imbalance that starved local governments. This is partially true but misleading: central transfers (~¥10T) largely close the revenue gap, as Andrew Batson and others have shown. The deeper structural issue is on the expenditure side. Local government spending ambitions, driven by infrastructure competition and developmental mandates, consistently outrun total available revenue (own-source + transfers + land sales). Land finance papered over this for two decades, but the real estate collapse has now removed that buffer. With land revenue at half its 2021 peak, spending still growing, and no independent taxing authority, local governments have turned to off-balance-sheet borrowing via LGFVs to sustain expenditure levels. The US, by contrast, gives subnational governments genuine taxing autonomy, resulting in a structurally different (and more sustainable) expenditure-revenue dynamic.
Local Government In-Depth
The mechanics of China's local fiscal crisis. Central transfers largely close the on-budget revenue gap, but local spending ambitions consistently exceed what all sources can sustain, driving off-balance-sheet borrowing via LGFVs.
China Local Government Close-Up: Revenue, Spending, and the LGFV Escape Valve
Central transfers largely close the raw revenue gap. The real problem is that local spending ambitions consistently outrun all revenue sources combined, driving off-balance-sheet borrowing.
All other (science, culture, env., public safety…)
¥8.0T
Local own-revenue + central transfers
~¥24.7T
Local expenditure (general budget only)
¥24.4T
On paper, transfers close the gap. In practice, infrastructure investment and developmental spending push total outlays well beyond the general budget, funded by LGFV borrowing.
Central-to-local transfer flows, 2024. Showing how revenue is collected, redistributed, and spent.
Year:← time series coming soon
China — 2024
Central government revenue
¥10.0T
General public budget: ¥10.0T (tax ¥8.5T + non-tax ¥1.5T)
↓ transfers down
General transfers
¥8.7T
Equalization, old-age, education, basic services
Special transfers
¥0.8T
Earmarked for specific programs
Disaster/other
¥0.5T
Post-disaster recovery, one-off
↓
Local government total resources
¥24.4T
Own revenue ¥11.9T + Central transfers ¥10.0T + Fund budget ¥5.7T (incl. land ¥4.9T) — adjustments
Local dependence on central transfers
~46%
Transfers as share of local general budget spending. Rises to ~55% for inland/western provinces.
Own tax revenue ~$2.5T + Federal grants ~$1.1T. Additional ~$1.9T in non-tax revenue (hospitals, universities, utilities) not shown.
State/local dependence on federal grants
~22%
Federal grants as share of state/local total revenue. Varies by state: Mississippi ~43%, California ~25%.
The transfer system works, but it's not the whole story. Chinese local governments depend on central transfers for ~46% of general budget spending; US state/local governments depend on federal grants for ~22%. But the common framing that this dependency is itself the crisis is misleading. Transfers largely close the on-budget revenue gap. The real crisis is that local government spending, driven by infrastructure competition and developmental mandates, consistently exceeds what all revenue sources (own-source + transfers + land sales) can sustain. Unable to raise taxes or borrow on-budget, local governments created LGFVs as an off-balance-sheet escape valve. The transfer system's inefficiencies (multi-layered pass-throughs, earmarking mismatches, delays of a year or more as funds cascade from province to prefecture to county to township) compound the problem but are not its root cause. See Sine (2024), "The Rise and Fall of LGFVs" for fuller treatment.
The Hidden Balance Sheet: China's Augmented Government Debt
China's official government debt understates the true fiscal burden. The IMF's "augmented" measure includes local government financing vehicle (LGFV) debt, which has grown from ~13% of GDP in 2014 to ~50% in 2024. Data from IMF Article IV reports (2018, 2023, 2024) and author calculations.
China augmented government debt as % of GDP, by component
Central govLocal (explicit)LGFV (implicit)Other gov
'14
Central 14.8%
Local explicit 23.8%
LGFV 13.4%
52.3%
'15
LGFV 17.6%
56.5%
'16
LGFV 27.2%
68.1%
'17
LGFV 32.2%
74.6%
'18
LGFV 38.3%
80.3%
'19
LGFV 40.3%
86.3%
'20
LGFV 44.3%
98.3%
'21
LGFV 43.8%
100.8%
'22
LGFV 45.7%
109.7%
'23
LGFV 48.1%
116.1%
'24
Central 26.2%
Local explicit 34.3%
LGFV 49.6%
Other 13.9%
124.0%
Source: IMF Article IV Reports for China (2018, 2023, 2024 editions); author calculations. "Augmented" = official central + local explicit debt + LGFV implicit debt + other government obligations.
LGFV debt alone as % of GDP
'14
13.4%
'16
27.2%
'18
38.3%
'20
44.3%
'22
45.7%
'24
49.6% (IMF)
Note: IMF figures are based on the ~3,000 LGFVs that publicly disclose financials. Another ~9,000 smaller LGFVs have never accessed the bond market and are missing from the data. Assuming a Pareto distribution, actual LGFV debt is likely ~25% higher, or roughly 60% of GDP (~¥75T) in 2023. See Sine (2024).
LGFV debt sustainability: the numbers don't work
In aggregate, LGFV earnings (EBITDA) do not cover interest payments. The interest coverage ratio has hovered near or below 1.0x for years, meaning new debt is routinely required just to service existing obligations.
Avg return on assets
~1%
Avg borrowing cost
~5%
Interest coverage ratio
≤1.0x
Source: WIND, via Zuo & Lin, "Assessing the Overall Debt Risk of Chinese LGFVs," CSPI (2023); IMF, "Local Government Financing Vehicles Revisited" (2022). 80-90% of annual LGFV spending is funded by new debt.
How this connects: expenditure excess, not revenue gaps
LGFV debt is not primarily the result of central-local revenue imbalances (which transfers largely offset). It is the result of local spending ambitions, infrastructure competition, and developmental mandates that consistently exceeded what all revenue sources combined could sustain. LGFVs were the off-balance-sheet escape valve. The ¥10T debt swap (Nov 2024) converts some LGFV debt to explicit local bonds but does not address the expenditure trajectory. Without either curbing local spending ambitions or unlocking new revenue (property tax, PIT expansion, consumption tax devolution), the debt will continue growing. See Sine (2024), "The Rise and Fall of LGFVs".
For Comparison: US Federal Debt Held by the Public
All on-balance-sheet. No hidden LGFV-equivalent layer. But growing rapidly from a low base post-Clinton surpluses, accelerated by the 2008 crisis and COVID. Source: CBO, FRED, OMB.
US federal debt held by public as % of GDP
'00
33%
'03
35%
'07
35%
'09
52%
'12
70%
'14
74%
'16
76%
'19
79%
'20
100% ← COVID
'21
97%
'22
95%
'23
97%
'24
~99%
Source: CBO, OMB, FRED (FYGFGDQ188S). "Held by the public" excludes intragovernmental holdings (Social Security trust fund, etc.). Including those, gross federal debt is ~124% of GDP. US total government debt (federal + state + local) is ~130%. CBO projects debt held by public reaching 116% by 2034 under current law.
The comparison: At face value, US federal debt (99% of GDP) and China's official government debt (~61%) make China look more fiscally sound. But once LGFV and other implicit obligations are included, China's augmented government debt (124% of GDP) exceeds the US figure. The critical difference is transparency: US debt is entirely on-balance-sheet, traded in the world's deepest bond market, denominated in the reserve currency, and serviced at market rates. China's LGFV debt is off-balance-sheet, held primarily by the domestic banking system, with interest coverage below 1.0x. The US has a debt level problem; China has a debt level problem and a debt structure problem.
Primary sources: MOF 财政收支情况 (2011-2024) · NPC budget execution reports · Lin, China's Public Finance (Cambridge UP, 2022) · Rhodium Group, China Financial Fiscal Decay (Feb 2026) · CBO Monthly Budget Review · OMB Historical Tables · OECD Revenue Statistics 2024 · Census Bureau Annual Survey of State and Local Government Finances · Urban Institute State and Local Finance Data · usgovernmentspending.com · usgovernmentrevenue.com