China has introduced property taxes

After much deliberation, China has introduced property taxes. So far, however, they will test their effects on the economy only in some regions. Chinese politicians believe that taxes will help fight the ever-growing real estate bubble. Taxation is also intended to limit the increasingly frequent speculative real estate trading. The planned move was announced by the local state intelligence agency Xinhua, referring to Saturday's decision of the All-China Assembly of People's Deputies, which serves as parliament in China. The Deutsche Welle portal also informed about it. The State Council of the People's Republic of China, which is the country's highest executive and supreme administrative body, will soon decide on the details of the planned taxation. According to estimates, the tax will apply to residential housing and non-residential premises. It should also affect landowners. However, houses in rural China should be exempted. The price of real estate in China has risen by more than 2,000 percent since the 1990s. In terms of the average earnings that the Chinese earn in a month, real estate in some major Chinese cities is even less affordable than in the Western world. Cities like Beijing or Shanghai are thus surpassing New York or London in this respect. Ownership housing is very widespread in China, with up to 90 percent of Chinese living on their own. Many people own more than one property here. Due to this, there is considerable resistance to property taxes in the country, not only among ordinary Chinese, but also within the local Communist Party. Many Chinese regional politicians fear that the planned regulation will stifle demand for real estate and that prices for not only housing units will fall sharply. They warn that a large part of the population could become impoverished and economic growth could also affect regulation, which is no longer as enormous as it was a few years ago. The proposal comes at a time when the Chinese real estate market is under enormous pressure. This is mainly due to the problems of the indebted Chinese real estate company China Evergrande. The company owes banks, suppliers and other actors in the amount of several billion euros, and this threatens the overall stability of the entire economy. According to Bloomberg, this is one of the reasons why sales of residential housing in China fell for the first time in six years, by about seventeen percent. However, the property tax proposal is not entirely new in China. The idea first appeared in 2003. But now, over the years, the design is gaining more concrete outlines.