The Chinese government will hire more than 25,000 tax officials this year, the largest intake in a decade. Analysts say the move signals a "wringing a dry towel" push to tighten tax collection to fill state coffers drained by the real estate market's collapse. As revenue from traditional tax bases like land sales plunges, authorities are turning their sights to the digital economy, such as mobile live commerce and TikTok, and to high earners such as celebrities and influencers.
On the 26th, major outlets including the Financial Times (FT) in the U.K., citing the National Civil Service Administration of China, reported that central and local government tax departments plan to hire a total of 25,004 people this year. Two out of every three new civil servants will be tax-related personnel. The overall number of civil service hires is expected to edge down, but the tax sector alone will recruit the most since 2012.
Behind the large-scale hiring lies a severe fiscal crunch. In China, the real estate market began an outright slump starting in 2021. Since then, dwelling prices in major cities have fallen, and sales and investment indicators have deteriorated rapidly. With the prolonged downturn continuing this year, weakened demand—such as more listings and sluggish sales—persists.
Chinese local governments had long covered a significant share of their finances by selling state-owned land-use rights to property developers, a model known as "land finance." But after the 2021 default at Evergrande and the bursting of the property bubble, this revenue source has effectively dried up. On top of that, as the central government has cracked down on indiscriminate fee collection by localities, local finances have been pushed to the brink.
Last year, the Chinese government set a fiscal deficit target at 4% of gross domestic product (GDP), surpassing the long-regarded 3% red line for the first time. The financial sector predicted that the actual fiscal situation would be tighter than the headline figure suggests. Goldman Sachs estimated that China's "broad fiscal deficit," combining the central and local governments and various fiscal funds, will approach 12% of GDP by the end of 2025. Factoring in off-book expenditure indicates that spending is growing much faster than the money the government takes in.
With coffers depleted, Chinese authorities have zeroed in on the fast-growing digital economy as a new tax base. Online platform areas that had been loosely taxed, such as e-commerce and livestreaming, are prime targets. Tax authorities in major cities including Beijing judged that conventional methods have limits in overseeing these sectors.
A secretary-general of a tax-related association in northern China, who requested anonymity, told the FT, "With the explosive growth of the online economy, the number of taxable entities has surged, making the old model—where one civil servant handled a specific taxpayer—no longer sustainable," and "To handle the vast online tax workload, there is an urgent need for new hires who, beyond accounting knowledge, also have AI and data analysis skills."
China's tax authorities are not just adding headcount; they are recruiting specialized talent to tighten oversight of corporations and high earners. Li Qian, a researcher at Offen Education Technology, said, "This large-scale recruitment coincides with the retirement of tax officials hired in the 1980s," adding, "As tax supervision and precision audits intensify, demand has surged for experts in finance, accounting, statistics and IT."
Authorities are also sharply scaling back corporate income tax breaks that local governments had overused to attract corporations, citing the need to curb industrial overcapacity. Indeed, officials at Beijing-based financial firms said, "Corporations that previously received local tax benefits are recently being found in violation and are being notified to pay back taxes."
Taxes on the wealthy have also been tightened. Authorities are widening the tax net on high earners who have capital gains from overseas stock investments. Chinese investors with overseas portfolios could face taxes of up to 20% on their worldwide income.
Ultimately, the Xi Jinping administration appears set to focus for now on putting out fires through strong tax audits and staffing increases. Yang Zhiyong, president of the Chinese Academy of Fiscal Sciences, said, "New types of industries are creating tax bases, but without timely tax reform, it is difficult to translate them into actual revenue."