China Reduces Threshold for Tax Refunds for Foreign Tourists to Boost Consumption
The Chinese regime announced a lower minimum purchase amount on April 27 for tax refunds for foreign tourists and other measures to boost consumption amid a tariff war with the United States. Analysts are skeptical about their effect.
China's Ministry of Commerce and five other departments issued the new policy, which lowered the threshold for tax refunds from 500 yuan ($69) to 200 yuan ($27.50). Foreign travelers who purchase tax-refundable items worth 200 yuan or more at the same eligible store on the same day are eligible to apply for what officials call the departure tax refund.
At the same time, the limit for receiving the refund in cash was raised from 10,000 yuan ($1,375) to 20,000 yuan ($2,751), and there are no restrictions on refunds via bank transfer.
The notice also included other measures to boost foreign tourist spending in China, such as expanding the coverage of tax refund shops and encouraging various regions to add tax refund shops in large shopping districts, pedestrian streets, tourist attractions, resorts, airports, passenger ports, hotels, and other such locations.
Eligible travelers include foreigners or residents of Hong Kong, Macao, and Taiwan who have stayed in mainland China for no more than 183 consecutive days.
Sheng Qiuping, the regime's vice minister of commerce, said at a press conference that last year, inbound consumption by overseas tourists accounted for about 0.5 percent of China's GDP, while the numbers in other major countries accounted for between 1 percent and 3 percent of GDP.
Weak Local Consumption
In recent years, China has been experiencing a trend of low consumption as Chinese shoppers are tightening their spending and choosing to buy cheaper products amid the sluggish economy.
Related Stories
4/3/2025
1/21/2025
Beijing's social consumer goods retail sales in March were 104.9 billion yuan ($14.4 billion), a sharp drop of 9.9 percent compared with March last year, according to public data. In the first quarter, Beijing's consumer goods retail sales were 345.9 billion yuan ($47.57 billion), a decrease of 3.3 percent.
Shanghai's retail sales of consumer goods in March were 128 billion yuan ($17.6 billion), a drop of 14.1 percent year-over-year. Retail sales in the first quarter fell slightly by 1.1 percent.
The effect of the regime's measures on these trends will be negligible, U.S.-based economist Davy J. Wong told The Epoch Times on April 28.
'It may have a little effect in the short term, but the overall problem cannot be solved by such minor repairs. The downgrade in domestic consumption is caused by falling income, youth unemployment, and a decline in social confidence, and foreign tourists' consumption is a drop in the bucket.'
An employee uses balloons to attract customers at a fashion retailer during a promotional sale at a shopping mall in Shenzhen, China's Guangdong Province, on Nov. 1, 2019.
Andy Wong/AP
Xu Zhen, a senior professional in China's capital market, told The Epoch Times on April 28, 'In 2024, 80 percent of overseas tourists [were] from Hong Kong, Macau, and Taiwan. The deterioration of China's economy has more or less impacted the economies of Hong Kong and Macau, and the spending power of these tourists is also limited.'
He agreed that 'relying on the tax refund policy for overseas tourists to boost the economy is a drop in the bucket and is far from making up for the losses caused by consumption downgrades.'
Wong added that the new measures are a contingency strategy to cope with the dual pressures of weak domestic demand and shrinking external demand, rather than a confident long-term open policy.
'On the surface, the measures seem to promote tourist shopping, but in essence, the regime hopes to use 'short-term, quick cash consumption' to offset the pressure of weak domestic economy and declining exports,' he said.
The contribution of foreign tourist spending to China's GDP will be very limited, Wong said. 'China's security risks, visa reviews, and international image issues outweigh its shopping appeal, and lowering the tax refund threshold alone will not be enough to reverse the overall trend,' he said.
'What China really needs is to rebuild domestic consumer confidence and improve its external image, economic system, and rule of law, rather than just relying on tax rebates of a few hundred yuan to attract the world,' he said.
Luo Ya and The Associated Press contributed to this report.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Upturn
an hour ago
- Business Upturn
Batik, Dong Songs, Tea Aroma Bridge China-Sweden Friendship! Guizhou Cultural Feast Draws Swedish Crowds
By GlobeNewswire Published on June 7, 2025, 16:06 IST STOCKHOLM, June 07, 2025 (GLOBE NEWSWIRE) — 'Nihao! China' Dragon Boat Festival Garden Party jointly held by China Cultural Center in Stockholm and Culture and Tourism Department of Guizhou Province, successfully concluded at Kungsträdgården, Stockholm, Sweden on May 31st (local time in Sweden). To celebrate the 75th anniversary of the establishment of diplomatic relations between China and Sweden, the Guizhou delegation, who came from afar, includes inheritors of intangible cultural heritage and song and dance troupes, meticulously prepared four immersive cultural experience zones: 'Tea for Harmony Yaji Cultural Salon', 'Wonder on Fingertips, Great Beauty of Intangible Heritage', 'Delicious Cuisine in Duanwu, Happy Journey to Explore' and 'Gorgeous Ethic Costumes, Beauty and Co-Prosperity'. Distinctive ethnic songs and dances of Guizhou dazzled the audience during the 'Conversation and Connection' performance, presenting the unique charm of the 'Fascinating Guizhou, A Heaven of Myriad Mountains' in a panoramic way to the Nordic audience, giving a heartfelt cultural tribute to the friendship between China and Sweden. Chinese Ambassador to Sweden Cui Aimin and Mrs. Li Lihong, Cultural Counselor of the Embassy of China in Sweden and Director of China Cultural Center in Stockholm Li Rui, and other guests were invited to attend the event. Ambassador Cui Aimin visited the four carefully arranged exhibition areas and watched Guizhou song and dance performances with great interest. 'We are deeply impressed by Guizhou's abundant tourism resources, vibrant ethnic cultures, and authentic local cuisine. The presentations by the Guizhou delegation vividly reflect the profound and unique charm of Chinese culture, and foster closer bonds between the peoples of China and Sweden', the couple said. The event attracted over 10,000 visitors and was met with enthusiastic feedback from the Swedish public. After attending the event, many audiences said the event made them develop a strong interest in Chinese culture, particularly the colorful culture of Guizhou. 'It's amazing! These handicrafts are so exquisite, and the tea tastes truly unique. I really want to visit Guizhou to experience it!' They said. Photos accompanying this announcement are available at: Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. Business Upturn takes no editorial responsibility for the same.
San Francisco Chronicle
2 hours ago
- San Francisco Chronicle
Trump's tariffs could pay for his tax cuts -- but it likely wouldn't be much of a bargain
WASHINGTON (AP) — The tax cuts in President Donald Trump's One Big Beautiful Bill Act would likely gouge a hole in the federal budget. The president has a patch handy, though: his sweeping import taxes — tariffs. The Congressional Budget Office, the government's nonpartisan arbiter of tax and spending matters, says the One Big Beautiful Bill, passed by the House last month and now under consideration in the Senate, would increase federal budget deficits by $2.4 trillion over the next decade. That is because its tax cuts would drain the government's coffers faster than its spending cuts would save money. By bringing in revenue for the Treasury, on the other hand, the tariffs that Trump announced through May 13 — including his so-called reciprocal levies of up to 50% on countries with which the United States has a trade deficit — would offset the budget impact of the tax-cut bill and reduce deficits over the next decade by $2.5 trillion. So it's basically a wash. That's the budget math anyway. The real answer is more complicated. Actually using tariffs to finance a big chunk of the federal government would be a painful and perilous undertaking, budget wonks say. 'It's a very dangerous way to try to raise revenue,' said Kent Smetters of the University of Pennsylvania's Penn Wharton Budget Model, who served in President George W. Bush's Treasury Department. Trump has long advocated tariffs as an economic elixir. He says they can protect American industries, bring factories back to the United States, give him leverage to win concessions over foreign governments — and raise a lot of money. He's even suggested that they could replace the federal income tax, which now brings in about half of federal revenue. 'It's possible we'll do a complete tax cut,'' he told reporters in April. 'I think the tariffs will be enough to cut all of the income tax.'' Economists and budget analysts do not share the president's enthusiasm for using tariffs to finance the government or to replace other taxes. 'It's a really bad trade,'' said Erica York, the Tax Foundation's vice president of federal tax policy. 'It's perhaps the dumbest tax reform you could design.'' For one thing, Trump's tariffs are an unstable source of revenue. He bypassed Congress and imposed his biggest import tax hikes through executive orders. That means a future president could simply reverse them. 'Or political whims in Congress could change, and they could decide, 'Hey, we're going revoke this authority because we don't think it's a good thing that the president can just unilaterally impose a $2 trillion tax hike,' '' York said. Or the courts could kill his tariffs before Congress or future presidents do. A federal court in New York has already struck down the centerpiece of his tariff program — the reciprocal and other levies he announced on what he called 'Liberation Day'' April 2 — saying he'd overstepped his authority. An appeals court has allowed the government to keep collecting the levies while the legal challenge winds its way through the court system. Economists also say that tariffs damage the economy. They are a tax on foreign products, paid by importers in the United States and usually passed along to their customers via higher prices. They raise costs for U.S. manufacturers that rely on imported raw materials, components and equipment, making them less competitive than foreign rivals that don't have to pay Trump's tariffs. Tariffs also invite retaliatory taxes on U.S. exports by foreign countries. Indeed, the European Union this week threatened 'countermeasures'' against Trump's unexpected move to raise his tariff on foreign steel and aluminum to 50%. 'You're not just getting the effect of a tax on the U.S. economy,' York said. 'You're also getting the effect of foreign taxes on U.S. exports.'' Smetters at the Penn Wharton Budget Model said that tariffs also isolate the United States and discourage foreigners from investing in its economy. Foreigners see U.S. Treasurys as a super-safe investment and now own about 30% of the federal government's debt. If they cut back, the federal government would have to pay higher interest rates on Treasury debt to attract a smaller number of potential investors domestically. Higher borrowing costs and reduced investment would wallop the economy, making tariffs the most economically destructive tax available, Smetters said — more than twice as costly in reduced economic growth and wages as what he sees as the next-most damaging: the tax on corporate earnings. Tariffs also hit the poor hardest. They end up being a tax on consumers, and the poor spend more of their income than wealthier people do. Even without the tariffs, the One Big Beautiful Bill slams the poorest because it makes deep cuts to federal food programs and to Medicaid, which provides health care to low-income Americans. After the bill's tax and spending cuts, an analysis by the Penn Wharton Budget Model found, the poorest fifth of American households earning less than $17,000 a year would see their incomes drop by $820 next year. The richest 0.1% earning more than $4.3 million a year would come out ahead by $390,070 in 2026. 'If you layer a regressive tax increase like tariffs on top of that, you make a lot of low- and middle-income households substantially worse off,'' said the Tax Foundation's York. Overall, she said, tariffs are 'a very unreliable source of revenue for the legal reasons, the political reasons as well as the economic reasons. They're a very, very inefficient way to raise revenue. If you raise a dollar of a revenue with tariffs, that's going to cause a lot more economic harm than raising revenue any other way.''
Yahoo
2 hours ago
- Yahoo
Trump's tariffs could pay for his tax cuts -- but it likely wouldn't be much of a bargain
WASHINGTON (AP) — The tax cuts in President Donald Trump's One Big Beautiful Bill Act would likely gouge a hole in the federal budget. The president has a patch handy, though: his sweeping import taxes — tariffs. The Congressional Budget Office, the government's nonpartisan arbiter of tax and spending matters, says the One Big Beautiful Bill, passed by the House last month and now under consideration in the Senate, would increase federal budget deficits by $2.4 trillion over the next decade. That is because its tax cuts would drain the government's coffers faster than its spending cuts would save money. By bringing in revenue for the Treasury, on the other hand, the tariffs that Trump announced through May 13 — including his so-called reciprocal levies of up to 50% on countries with which the United States has a trade deficit — would offset the budget impact of the tax-cut bill and reduce deficits over the next decade by $2.5 trillion. So it's basically a wash. That's the budget math anyway. The real answer is more complicated. Actually using tariffs to finance a big chunk of the federal government would be a painful and perilous undertaking, budget wonks say. 'It's a very dangerous way to try to raise revenue,' said Kent Smetters of the University of Pennsylvania's Penn Wharton Budget Model, who served in President George W. Bush's Treasury Department. Trump has long advocated tariffs as an economic elixir. He says they can protect American industries, bring factories back to the United States, give him leverage to win concessions over foreign governments — and raise a lot of money. He's even suggested that they could replace the federal income tax, which now brings in about half of federal revenue. 'It's possible we'll do a complete tax cut,'' he told reporters in April. 'I think the tariffs will be enough to cut all of the income tax.'' Economists and budget analysts do not share the president's enthusiasm for using tariffs to finance the government or to replace other taxes. 'It's a really bad trade,'' said Erica York, the Tax Foundation's vice president of federal tax policy. 'It's perhaps the dumbest tax reform you could design.'' For one thing, Trump's tariffs are an unstable source of revenue. He bypassed Congress and imposed his biggest import tax hikes through executive orders. That means a future president could simply reverse them. 'Or political whims in Congress could change, and they could decide, 'Hey, we're going revoke this authority because we don't think it's a good thing that the president can just unilaterally impose a $2 trillion tax hike,' '' York said. Or the courts could kill his tariffs before Congress or future presidents do. A federal court in New York has already struck down the centerpiece of his tariff program — the reciprocal and other levies he announced on what he called 'Liberation Day'' April 2 — saying he'd overstepped his authority. An appeals court has allowed the government to keep collecting the levies while the legal challenge winds its way through the court system. Economists also say that tariffs damage the economy. They are a tax on foreign products, paid by importers in the United States and usually passed along to their customers via higher prices. They raise costs for U.S. manufacturers that rely on imported raw materials, components and equipment, making them less competitive than foreign rivals that don't have to pay Trump's tariffs. Tariffs also invite retaliatory taxes on U.S. exports by foreign countries. Indeed, the European Union this week threatened 'countermeasures'' against Trump's unexpected move to raise his tariff on foreign steel and aluminum to 50%. 'You're not just getting the effect of a tax on the U.S. economy,' York said. 'You're also getting the effect of foreign taxes on U.S. exports.'' She said the tariffs will basically wipe out all economic benefits from the One Big Beautiful Bill's tax cuts. Smetters at the Penn Wharton Budget Model said that tariffs also isolate the United States and discourage foreigners from investing in its economy. Foreigners see U.S. Treasurys as a super-safe investment and now own about 30% of the federal government's debt. If they cut back, the federal government would have to pay higher interest rates on Treasury debt to attract a smaller number of potential investors domestically. Higher borrowing costs and reduced investment would wallop the economy, making tariffs the most economically destructive tax available, Smetters said — more than twice as costly in reduced economic growth and wages as what he sees as the next-most damaging: the tax on corporate earnings. Tariffs also hit the poor hardest. They end up being a tax on consumers, and the poor spend more of their income than wealthier people do. Even without the tariffs, the One Big Beautiful Bill slams the poorest because it makes deep cuts to federal food programs and to Medicaid, which provides health care to low-income Americans. After the bill's tax and spending cuts, an analysis by the Penn Wharton Budget Model found, the poorest fifth of American households earning less than $17,000 a year would see their incomes drop by $820 next year. The richest 0.1% earning more than $4.3 million a year would come out ahead by $390,070 in 2026. 'If you layer a regressive tax increase like tariffs on top of that, you make a lot of low- and middle-income households substantially worse off,'' said the Tax Foundation's York. Overall, she said, tariffs are 'a very unreliable source of revenue for the legal reasons, the political reasons as well as the economic reasons. They're a very, very inefficient way to raise revenue. If you raise a dollar of a revenue with tariffs, that's going to cause a lot more economic harm than raising revenue any other way.'' Paul Wiseman, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
