China's Major Tax Problem: Introduction & China's 3 Actual Tax Problems

The video discusses China's tax problems, highlighting the challenges in tax collection due to its dual nature as a large economy with informal sectors. It explains how local governments rely on land leases and business taxes for revenue, leading to infrastructure overdevelopment. The video also covers the financial risks posed by local government financing platforms and the impact of COVID-19 lockdowns on the economy.

What is the main issue with China's tax revenue compared to its economic size?

• China has a higher tax revenue than the United States.

• China's tax revenue is significantly lower than expected for its economic size.

• China's tax revenue is exactly proportional to its economic size.

• China does not collect any taxes.

How do local governments in China primarily generate revenue?

• By taxing businesses and selling land leases.

• Through parking tickets and business fees.

• By issuing bonds and collecting income taxes.

• Through property taxes and federal funding.

What is a significant consequence of the infrastructure arms race among Chinese provincial governments?

• Decreased economic growth.

• Higher tax revenues.

• A surplus of infrastructure and ghost cities.

• Increased foreign investment.

What is a local government financing platform in China?

• A private company set up by local governments to secure loans.

• A tax incentive for businesses.

• A method for local governments to issue bonds directly.

• A federal program to support local government projects.

How have COVID-19 lockdowns affected local Chinese governments' revenue?

• Increased revenue due to higher taxes.

• No impact on revenue.

• Decreased revenue due to reduced business activity.

• Increased revenue from international trade.

What has caused the wavering confidence in China's real estate market?

• Stable property prices.

• Government incentives for real estate.

• Increased foreign investment.

• High-profile property development bankruptcies.

What is a potential risk of the Chinese bond market?

• Bonds are not backed by any assets.

• Bonds are rated too low, causing investor panic.

• Bonds are only available to foreign investors.

• The market relies on perpetual growth and may implode.