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China Briefing
This Week in AsiaOpinion
Wang Xiangwei
Wang Xiangwei

China Briefing | Why it’s time for China to cut its 45 per cent income tax rate

  • The top bracket, payable on monthly income over 80,000 yuan, or US$12,000, hinders efforts to expand the tax base, boost investment and attract global talent
  • Shenzhen, Hainan and Beijing appear to have realised this. Perhaps it’s time the central government did too

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Photo: Bloomberg
Wang Xiangwei
Dong Mingzhu may be one of China’s richest women as the leader of the world’s largest air-conditioning giant with annual sales of 200 billion yuan (US$30 billion) but the chairwoman of Gree Electric Appliances has gained popularity by championing the cause of the less well-off.

A case in point is that over the past years, she has consistently and publicly pressed the Chinese government to reform its regressive and much maligned personal income tax regime by hiking the tax-free threshold so that most Chinese don’t have to pay income tax.

Since 2018, as a deputy to the National People’s Congress, China’s parliament, she has used the occasion of the NPC’s annual session to drum up public support for her proposal to raise the threshold at which tax becomes payable to 10,000 yuan a month, doubling the current minimum of 5,000 yuan a month.
In the run-up to this year’s NPC session, which opened on Friday, she told reporters that she would continue to push for her plan at the upcoming meetings, saying it would help boost people’s spending power at a time when Beijing was focused on domestic consumption to drive the economy amid falling external demand and trade frictions with the United States.
Chairwoman of Gree Electric Appliances, Dong Mingzhu. Photo: Cissy Zhou
Chairwoman of Gree Electric Appliances, Dong Mingzhu. Photo: Cissy Zhou

Dong is not alone. A number of influential Chinese tycoons including Xu Jiayin, chairman of Evergrande Group, a major property developer, and Cao Dewang, chairman of Fuyao Group, one of the world’s largest glass manufacturers, have made similar appeals around the time of the NPC’s annual sessions, when the public’s attention is on economic and livelihood issues. The NPC’s annual session this year is even more important as deputies are to review and approve the country’s next five-year plan, for 2021 to 2025, and its long-range objectives known as Vision 2035.

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