China raises taxes on some sectors to boost finances: a one-off fix or tough times ahead?

Faced with declining fiscal revenue in late 2025 due to an economic slowdown and deflation, Beijing has increased taxes on select sectors, including telecommunications. The government reclassified some telecoms services under the value-added tax (VAT) structure, raising the rate from 6% to 9%. This adjustment aims to align taxation with the sector's role as essential infrastructure. While the move has fueled speculation about broader tax increases, analysts suggest it addresses category inconsistencies rather than signaling a widespread policy change. Experts warn that broad-based tax hikes could suppress consumption and investment, potentially worsening deflationary pressures.

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