China’s new 5-year plan targets tax reform as local governments face fiscal strain

South China Morning PostEN 1 min read 100% complete by Ji SiqiMarch 6, 2026 at 04:00 AM

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China's new five-year plan, starting in 2026, prioritizes tax reform to address fiscal strain on local governments. The plan aims to secure more tax revenue while maintaining a "reasonable macro tax burden," shifting from the previous period's focus on tax cuts. Beijing intends to increase central government authority and fiscal expenditures, reducing responsibilities delegated to local governments. This reform seeks to balance revenue generation with the need to avoid overburdening businesses amid economic challenges like a slowdown and deflationary pressures. The government hopes tax reform will address imbalances such as overcapacity and weak consumption. The 2026 budget report also pledges to strengthen fund planning to better meet local needs.

Key Entities & Roles

Key Player Opposition Context

Chinese Communist Party 50% Ministry of Finance 60% National People's Congress 60% Beijing 70% Li Qiang 70% China ×290%

Keywords

tax reform 100% fiscal strain 80% local governments 70% tax revenue 70% macro tax burden 60% five-year plan 60% local tax system 50% economic slowdown 50% central government authority 40%