Family Researcher | Listed companies are queuing up to pay back taxes, another developer’s rooftop “airdrop” appeared, and the central government says local fiscal deficits have become the “norm”…

The noose is tightening.

We are witnessing history

The tide has come

This year has seen a rare scene in local finance history: all provinces, including the wealthiest provinces in Guangdong and the Yangtze River Delta, have had deficits, with revenues falling short of expenditures. Finally, not a single province is self-sufficient, why can’t local finances be cleared?

In response to this situation, the authorities have spoken: expenditures exceeding revenues is the norm.

In the first half of 2026, local general budget revenue was 6.88 trillion yuan, with expenditures of 12.21 trillion yuan, and a self-sufficiency rate of 56.3%, just over half.

This means to face it, disdain it, accept it, and embrace it.

The solution to the problem is: this year’s budget transfer payments are 10.42 trillion yuan, of which 9.4 trillion yuan has been allocated, so local governments will definitely be able to balance their books.

Indeed, since transfer payments exceeded 10 trillion yuan in 2023, they have surpassed this amount every year, reflecting the prosperity of the national economy. Who received the 10 trillion yuan in transfer payments, averaging 68,000 yuan per person?

Approaching 10 trillion yuan in just half a year is still quite shocking, a feeling no less profound than seeing the serene waters of the Three Gorges Dam reservoir before a typhoon hits.

It’s good, truly good, but nothing comes from nothing. Where does the money for transfer payments come from?

Of course, it comes from the wealth created by private enterprises in the five southeastern provinces.

Originally, for the past decade or so, there was a very “virtuous” cycle where everyone in the system lived well: the five southeastern provinces (Guangdong, Jiangsu, Zhejiang, Fujian, Shanghai) bore the brunt, paying taxes that were then used for domestic and international transfer payments; these five provinces themselves relied on land sales for income, making local residents pay a second time on top of taxes through high housing prices.

Net tax contributions earned official positions, land sales supported themselves, neither side owing the other.

But the problem now is that no matter how much you try to boost it, housing prices just won’t rise.

The just-released PMI for prosperity and decline has seen a rare triple blow!

• Manufacturing PMI: 49.2%, a decrease of 1.1 percentage points from the previous month.
• Non-manufacturing business activity index: 49.0%, a decrease of 1.2 percentage points from the previous month.
• Composite PMI output index: 49.3%, a decrease of 1.3 percentage points from the previous month.

There is actually another more terrifying data point: the construction industry new orders index at 40.1%, a significant decrease of 6.2 percentage points from the previous month.

Construction industry employment index: 40.9%.

Many village entrances are bustling with activity again, with electric cars parked outside, a scene of prosperity.

But the cost of “rural revitalization” has made local finances in the five southeastern provinces difficult. Among them, Shanghai has cut its municipal land transfer revenue budget by 26.3% for 2026, and it’s safe to say that land auctions in Guangdong and Zhejiang are extremely cold without even looking at the details.

Just now, there was news that the chairman of developer Zall, Yan Zhi, fell from a building.

During the pandemic, he provided 10 million yuan in relief funds, supplies via 5 aircraft, 3 makeshift hospitals, and 7 emergency hospitals.

But no one can withstand the crushing weight of the times.

Looking at the prosperity and decline line for the construction industry, it’s clear this won’t improve in the short term, and it can indeed only be the “norm”.

So what to do? We can only tighten our belts a little more.

However, this time it might not be local government officials who tighten their belts, but private enterprises.

A silent wave of tax retroactivity is joyfully underway.

• On July 31st, Jinhui Liquor announced: it had to pay a total of 69.8509 million yuan in consumption tax, value-added tax, corporate income tax, etc., plus 13.9672 million yuan in late fees, totaling 83.8181 million yuan, which is expected to reduce its net profit for 2026 by 74.9982 million yuan.
• In June, Huazhi Liquor paid 120 million yuan in back taxes;
• Aishide paid 185 million yuan in corporate income tax and 123 million yuan in late fees, totaling 308 million yuan;
• The Quanzhou subsidiary of Sanan Optoelectronics self-inspected and paid 86.4095 million yuan;
• Beidahuang paid 1.41 billion yuan;
• Hualing Steel paid 696 million yuan;
• BeiGene paid 446 million yuan.

Incompletely统计, in the first half of 2026, nearly 80 A-share listed companies disclosed tax retroactivity, totaling over 6 billion yuan, with over 20 companies announcing concentrated payments in June alone.

If even listed companies with the strictest financial controls have so much “tax evasion”, what is the situation for small and medium-sized private enterprises that have no disclosure obligations, mix private and public accounts, and were originally marginally profitable?

No need to guess.

Of course, there are also shareholders personally and voluntarily paying hundreds of millions. Detained for 712 days, a millionaire became a gig worker earning 3,000 yuan…

The problem now is that 320 million people are in flexible employment. If the system shrinks further, then Li Zicheng is bound to grow. Someone mentioned Li Zicheng, who are they trying to threaten?

But if it doesn’t shrink, who will be supported?

Historically, there’s a “dead end” from the school: without collection, there’s no pay; without pay, bandits aren’t suppressed; collecting pay forces the people to become bandits, thus the more bandits are suppressed, the more they multiply, falling into an infinite loop.

As the Grand Secretary of the time, Jiang Dejing, retorted, local officials pursued and extorted taxes, causing suffering to the people, who welcomed bandits when they appeared, even going out to meet them before they arrived. Soldiers were not trained, but the people were lost, and in the end, no taxes could be collected.

If you were sitting in the village committee making the decision, what would you choose?

Should we follow Milei and suspend collective salaries, including the president’s, once a deficit occurs? After Argentina, Soviet legacy is being “cleared” in South America

That is impossible.

Family Biography Editorial Department

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