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 others 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.
Note: MOF direct links (mof.gov.cn) may be intermittently inaccessible outside China.
1Overview
Total government income vs. expenditure across both countries, 2011-2024.
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.
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.
2Revenue
Where the money comes from: tax composition, land finance, and how revenue has evolved.
Government Revenue: The Full Picture
All government revenue streams, 2024. Bar width = share of total revenue.
China
Unitary state. Tax rates and bases set by Beijing, though localities retain limited discretion over rebates, temporary exemptions, and rate bands on minor local taxes (e.g. property tax pilots, resource tax ranges). Four parallel budgets (四本账).
¥37.6T~29% of GDP
Share of total revenue
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
Federal system. States and localities set their own income, sales, and property tax rates autonomously. BEA NIPA consolidated measure.
$8.6T~29% of GDP
Share of total revenue
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.
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.
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.
Where the money goes: spending levels, functional priorities, and how they've shifted.
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.
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.
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.
China's Four Budgets: Revenue vs. Expenditure, 2011-2024
All four budgets (四本账) combined. Revenue stacked above zero, expenditure below. The black line is the net balance. The deficit widened from near-zero (2011) to ¥9.9T (2024), driven by land revenue decline (amber shrinking above zero) and expenditure growth (blue expanding below). SI premiums (green) are the only revenue stream growing fast enough to offset the land collapse.
Revenue ▲General taxGeneral non-taxFund budgetSI premiumsSOE capital
Source: MOF annual 财政收支情况 reports (2011-2024). Revenue = general budget (tax + non-tax) + fund budget + SI premiums only (excl. govt subsidies to avoid double-counting) + SOE capital dividends. Expenditure = general budget + fund budget + SI benefit payments + SOE capital outlays. Bond proceeds excluded from revenue.
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.
5Central vs. Local
Vertical fiscal imbalance: who collects, who spends, and how the gap is bridged.
The Big Picture
Who collects revenue and who does the spending, at a glance.
China General public budget, 2024
Revenue collection
Central 46%
Local 54%
¥10.0T central · ¥12.0T local · ¥22.0T total
Expenditure
14%
Local 86%
¥4.1T central · ¥24.4T local · ¥28.5T total
How local bridges the gap
Own-source 49%
Transfers 41%
Land
Own-source ¥12.0T · Central transfers ¥10.0T · Net land + other ¥2.5T
United States BEA NIPA consolidated, 2024
Revenue collection
Federal 62%
S+L 38%
$5.3T federal · $3.3T state+local · $8.6T total
Expenditure
Federal 65%
S+L 35%
$6.75T federal · $3.65T state+local · $10.4T total
How S+L bridges the gap
Own-source 75%
Fed grants 25%
Own-source tax + fees $3.3T · Federal grants ~$1.1T
The structural contrast: China collects revenue roughly 50/50 but spends 86% locally. The US collects 62% federally and spends 65% federally. China's local governments depend on transfers for 41% of their resources; US state+local governments depend on federal grants for ~25%. China's gap is further complicated by land sales revenue (¥4.9T, declining) and off-budget LGFV borrowing, neither of which has a US equivalent.
Source: China = MOF 2024 general budget. US = BEA NIPA Table 3.1 (receipts, expenditures); CBO (federal); Census Bureau (S+L). China "how local bridges the gap" covers general budget only; full local picture (all four budgets) detailed below.
Local Government Revenue vs. Expenditure, 2003-2024
All on-budget local revenue (excluding bond proceeds) stacked above zero; all on-budget expenditure (general + fund) below. Revenue includes central transfers. The black line tracks the net balance. Official MOF data only. Through ~2013, revenue kept pace with expenditure. The balance has deteriorated since, reaching ¥−5.0T by 2024 as land sales collapsed while spending commitments grew.
Source: MOF annual fiscal reports, local level (general public budget + government fund budget). Revenue excludes bond proceeds. Local general budget expenditure = ~86% of national total. Off-budget LGFV activity not shown; see Debt section.
Same data as the 2024 endpoint above, broken into components. Revenue excludes bond proceeds (borrowing). The ¥5.0T gap is closed by special bond issuance (~¥4T) and other borrowing. Hover any segment for detail.
Education ¥4.0TSocial security ¥2.8THealthcare ¥1.8TAgriculture ¥2.3TInfrastructure + urban ¥3.5TDebt service ¥1.0TOther general ¥9.0TFund budget exp. ¥8.5T
Sources
¥27.9T
−
Uses
¥32.9T
=
Gap
¥5.0T
Who Bears the Spending Burden?
Central/federal vs. local/state share of each spending category, 2024. Dark = central or federal, light = local or state+local.
China
CentralLocal
United States
FederalS+L
Click any bar or category to reveal absolute values
Education
Central ¥0.21TLocal ¥4.00TTotal ¥4.21T
Federal $0.10TS+L $1.15TTotal $1.25T
Social security
Central ¥1.39TLocal ¥2.82TTotal ¥4.21T
Federal $1.46TS+L $0.00TTotal $1.46T
Healthcare
Central ¥0.20TLocal ¥1.83TTotal ¥2.03T
Federal $1.54TS+L $0.66TTotal $2.20T
Defense
Central ¥1.67TLocal ¥0.00TTotal ¥1.67T
Federal $1.05TS+L $0.00TTotal $1.05T
Debt service
Central ¥0.90TLocal ¥0.39TTotal ¥1.29T
Federal $0.88TS+L $0.15TTotal $1.03T
Transport
Central ¥0.24TLocal ¥0.96TTotal ¥1.20T
Federal $0.10TS+L $0.20TTotal $0.30T
Public safety
Central ¥0.04TLocal ¥0.81TTotal ¥0.85T
Federal $0.01TS+L $0.24TTotal $0.25T
Agriculture
Central ¥0.41TLocal ¥2.30TTotal ¥2.70T
Federal $0.03TS+L $0.01TTotal $0.04T
S&T
Central ¥0.34TLocal ¥0.81TTotal ¥1.15T
Federal $0.15TS+L $0.02TTotal $0.17T
Welfare
Central ¥0.18TLocal ¥0.27TTotal ¥0.45T
Federal $0.35TS+L $0.15TTotal $0.50T
Urban/community
Central ¥0.04TLocal ¥2.13TTotal ¥2.17T
Federal $0.02TS+L $0.06TTotal $0.08T
Environment
Central ¥0.08TLocal ¥0.44TTotal ¥0.52T
Federal $0.03TS+L $0.04TTotal $0.07T
Source: China splits from MOF budget execution reports and Lin (2022), Table 6.1. US splits from CBO, Urban Institute. China = general budget functional categories; US = BEA NIPA total with CBO/Census functional shares. All major categories shown for both countries. Click any row for absolute values.
The 1994 分税制 reform recentralized revenue collection while leaving spending responsibilities with local governments. The gap between local revenue share (dashed red) and local spending share (solid red) is the vertical fiscal imbalance. Left chart: before transfers. Right chart: after central transfers, local revenue share rises above spending share, closing the gap on paper.
Local spendingLocal revenueCentral spendingCentral revenue
Before central-local transfers
The gap between local spending (86%) and local revenue (54%) = 32pp. This is the raw vertical fiscal imbalance.
After central-local transfers
After transfers, local revenue share (91%) exceeds spending share (86%). On paper, transfers over-compensate. The real crisis is off-budget.
Source: MOF via Gavekal Data/Macrobond (1991-2014); MOF annual fiscal reports (2015-2024); extended by author. General public budget only. Based on analysis by Andrew Batson. "After transfers" = local own-source revenue + central transfers received.
Local government fund budget (政府性基金预算) revenue stacked above zero, expenditure below. Revenue is ~85-90% land sales. Expenditure covers land acquisition compensation, infrastructure development on sold land, and (from 2015) special bond-funded projects. Through 2019, the two sides roughly matched. From 2020, special bond spending pushed expenditure well above revenue. Then from 2022, land revenue collapsed on top. By 2024, expenditure was nearly double revenue.
Revenue (mostly land sales) ▲Expenditure (land costs + special bond spending) ▼Balance
Source: MOF annual fiscal reports (地方政府性基金预算, local level). Revenue = 地方政府性基金预算本级收入 (excludes bond proceeds and central transfers). Expenditure = 地方政府性基金预算支出 (includes special bond-funded spending). 2023-2024 local-level figures confirmed from MOF. 2011-2022 derived from national fund budget (local ≈ 95%).
The real problem: spending outpaces all revenue sources combined. The common framing that the 1994 分税制 reform starved local governments is partially true but misleading: central transfers (~¥10T) largely close the on-budget revenue gap. The deeper structural issue is on the expenditure side. Local 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 as the net land position chart shows, that buffer has reversed: land is now a net fiscal drain. Unable to raise taxes or borrow on-budget, local governments turned to LGFVs. See Sine (2024) for fuller treatment.
6Debt
On-balance-sheet and off-balance-sheet obligations.
Bridging the Gap: Government Bond Issuance
As the deficit widened, China turned increasingly to bond issuance to fill the gap between revenue and expenditure. Three main instruments carry the load.
Local government special bonds (地方政府专项债券) are the dominant instrument. Introduced in 2015 with a quota of just ¥0.1T, they have scaled to ¥4.4T by 2025. They sit under the fund budget and are theoretically repaid from project revenue (tolls, land sales from developed plots). In practice, they increasingly fund operating gaps and debt restructuring alongside infrastructure. Since they are classified as fund budget activity, they do not count toward the official fiscal deficit.
Local government general bonds (地方政府一般债券) fund the general budget deficit at local level and are repaid from general budget revenue. Quotas have grown more modestly, from ¥0.5T in 2015 to ~¥0.77T in 2025. These do count toward the official deficit.
Ultra-long special treasury bonds (超长期特别国债) are a central government instrument with 20-50 year maturities, issued off-budget. China had used them only three times before 2024 (1998 for bank recapitalization, 2007 for CIC formation, 2020 for pandemic relief). They returned in 2024 at ¥1.0T and rose to ¥1.3T in 2025, funding "major national strategies" (railways, airports, farmland) and consumer trade-in subsidies. Their reappearance signals Beijing stepping in with central balance sheet capacity as local fiscal space is exhausted.
New Bond Issuance Quotas, 2015-2025
NPC-approved new issuance quotas by instrument type. Does not include refinancing bonds (which roll over maturing debt) or the hidden debt swap bonds (discussed in the debt section below). The central government also issues regular treasury bonds to fund its own budget deficit (~¥3.3T in 2024), which are not shown here.
Local general bondsLocal special bondsUltra-long special treasury bonds (central)
Source: NPC-approved new issuance quotas from annual government work reports (政府工作报告) and MOF budget reports to NPC. 2015: general ¥500B, special ¥100B (2015 gov work report + MOF). 2016-2018: total new quotas from NPC budget execution reports (general/special split derived from limit changes). 2019-2024: special bond quotas stated in each year's gov work report. 2024 actual new issuance: general ¥700.5B, special ¥4T (NPC debt management report, Sep 2025). Ultra-long special treasury bonds: ¥1T in 2020 (State Council), ¥1T in 2024, ¥1.3T in 2025 (gov work reports).
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).
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 ¥12T hidden debt swap (Nov 2024, see next section) converts 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".
Reform Attempts
Addressing the Debt: Swap Attempts and LGFV Reform
China has twice attempted large-scale conversion of off-budget local government debt into official bonds, and is now running a campaign to dismantle LGFVs as a category. Progress claims should be weighed against the structural incentives that created the debt.
Debt Swaps: Two Rounds of "Opening the Front Door"
Round 1: The 2015-2018 Swap (¥12.2T)
Following the 2013 NAO audit that found ¥10.9T in local government debt and the 2014 Budget Law reform that first granted local governments legal borrowing authority, the State Council launched a three-year program to replace non-bond government debt (bank loans, trust products, LGFV bonds, BT payables) with local government bonds. Between 2015 and 2018, ¥12.2T in replacement bonds (置换债券) were issued, converting virtually all pre-2015 acknowledged government debt into the new bond framework. Interest costs fell from ~10% to ~3.5%, saving an estimated ¥200B/year. The swap succeeded in regularizing the stock of acknowledged government debt. It did not stop new LGFV borrowing, which accelerated after 2015 through new channels. See Sine (2024) for a detailed account.
Round 2: The 2024 Hidden Debt Package (¥12T)
In November 2024, the NPC Standing Committee approved the largest single debt restructuring in Chinese fiscal history, targeting the隐性债务 (hidden debt) that accumulated after the first swap. MOF reported hidden debt at ¥14.3T as of end-2023. Three components:
¥6T
New local government debt limit increase. Approved in one batch, issued ¥2T/year over 2024-2026. Proceeds retire off-budget LGFV obligations, converting them to on-budget local bonds.
¥4T
Earmarked from new special bond issuance: ¥800B/year for five years (2024-2028) to "replenish government fund budget resources" (补充政府性基金财力), dedicated to hidden debt retirement.
¥2T
Shantytown renovation (棚改) hidden debt maturing 2029+, to remain on original contract terms.
What the swap changes. Interest costs fall (estimated ~¥400B/year saved) and maturities extend. Hidden debt moves onto the official books: the explicit local government debt balance jumped 15% in 2024 to ¥47.5T. By mid-2025, ¥3.9T in swap bonds had been issued and ¥3.6T deployed. The total debt stock does not shrink. The pattern repeats: the 2015-2018 swap was supposed to close the back door on off-budget borrowing. Within five years, LGFV debt had doubled.
The LGFV "Transformation" Campaign
Alongside the debt swap, Beijing has launched a campaign to dismantle LGFVs as a category. A 2023 nationwide audit reportedly identified ~18,000 LGFVs, roughly 50% more than the 10-12k estimates widely used previously (Caixin, Oct 2025; the list itself has never been made public). Two linked policy thrusts are underway: 转型 (transformation) of platforms into nominally market-oriented SOEs, and 出清 (clear-out), harder-edged language signaling a genuine campaign. An unpublished directive (Document No. 150) allegedly requires all LGFVs to be delisted, "transformed," or otherwise exited by June 2027, contingent on clearing hidden debt, stripping government-financing functions, and obtaining two-thirds creditor consent.
PBOC Governor Pan Gongsheng told the NPC in October 2025 that 71% of all LGFVs had "transformed" and delisted; MOF's Lan Fo'an said 7,000 were removed in a single year. These claims should be treated with caution. The collapse of land finance does force genuine structural change, since LGFVs can no longer rely on the land-value cycle that sustained them. But the implausible scale of thousands of platforms all "transitioning" simultaneously, combined with continued local government incentives to maintain flexible investment vehicles, suggests much of this is cosmetic reclassification (上有政策，下有对策). Caixin cited industry experts calling many of these transformations superficial. The key regulatory documents (Nos. 35, 47, 14, 134, 150) governing LGFV reform remain unpublished, though most appear to have leaked. Whether Round 2 of debt reform breaks the cycle depends on whether the underlying expenditure incentives change. See Sine (2024, updated 2025).
Source: 2015-2018 swap: MOF, NPC budget reports; ¥12.2T cumulative figure from NPC. 2024 package: MOF Minister Lan Fo'an, NPC Standing Committee (Nov 4, 2024, gov.cn); hidden debt ¥14.3T per MOF. Progress: ¥3.9T issued / ¥3.6T deployed as of Jul 2025 (NPC debt report, Sep 2025). LGFV platform figures: PBOC report to NPC Standing Committee (Oct 2025). 2013 audit: NAO, "全国政府性债务审计结果" (Dec 2013).
All on-balance-sheet. No hidden LGFV-equivalent layer. Growing rapidly from a low base post-Clinton surpluses, accelerated by the 2008 crisis and COVID.
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.
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 · BEA NIPA Table 3.1 (FRED) · Urban Institute State and Local Finance Data