Core Viewpoint - The recent shift in terminology from "accelerate separation" to "clearance" regarding local financing platforms indicates that the transformation process is slower than expected, reflecting ongoing challenges in addressing local government debt issues [2][3] Group 1: Financing Platform Transformation - The term "clearance" signifies a higher requirement and more specific direction for the transformation of financing platforms, indicating that their historical role has been completed and they should transition to market-oriented state-owned enterprises [6] - The transformation of financing platforms is crucial to effectively control hidden local government debts, which have become a significant risk factor in local economic development [8] Group 2: Local Government Debt Issues - Local governments are still holding onto unrealistic expectations that higher levels of government will provide financial support during the transformation process, which has weakened their motivation to push for necessary changes [2][4] - The central government aims to resolve hidden debt issues by 2028, with potential acceleration to 2027, necessitating a faster transformation of financing platforms [2] Group 3: Financial Pressure on Local Governments - The "clearance" process may impose additional financial pressure on local governments, as they bear responsibility for certain hidden debts, and the transformation of financing platforms is fraught with challenges [7] - Local governments will need to adjust and optimize their expenditure structures to mitigate risks, with the central government providing some policy and financial support to ease the burden [7]

Core Viewpoint - The article discusses the disparity between tax revenue growth and nominal GDP growth, highlighting that in 2024, tax revenue growth is expected to lag behind nominal GDP growth by 7.6 percentage points, which poses a constraint on fiscal expansion. The analysis aims to explore whether tax growth can reverse this trend under a more proactive fiscal stance in 2025 [1]. Group 1: Tax Revenue and GDP Growth Patterns - Historical data shows a non-symmetrical fluctuation characteristic between tax revenue growth and nominal GDP growth, with a tax elasticity coefficient of approximately 2, meaning tax revenue growth typically fluctuates around zero when GDP growth is at a 5% baseline [2][7]. - The primary source of tax revenue elasticity is the income tax mechanism, where corporate profits fluctuate more than revenue, and personal income tax features a progressive rate that causes tax growth to exceed income growth [8]. - The decline in tax revenue in 2024 is primarily attributed to decreases in domestic value-added tax, export tax rebates, deed tax, and land value-added tax, with a total decline of 616.4 billion yuan, or 3.4% year-on-year [9][10]. Group 2: Industry Tax Burden Disparities - The concentration of tax revenue is significantly higher than that of GDP, with the top five industries contributing 77.4% of tax revenue compared to 58.8% of GDP [13]. - High tax burden industries include real estate, finance, and leasing services, with tax-to-value-added ratios exceeding 20%, while low tax burden industries are primarily in agriculture, education, and health [14]. - The tax revenue of the manufacturing and wholesale retail sectors is primarily influenced by fluctuations in the Producer Price Index (PPI), while the real estate sector's tax revenue is closely linked to land acquisition and property sales cycles [15][16]. Group 3: Tax Revenue Trends for 2025 - Tax revenue is expected to recover to 2023 levels, with a projected average growth rate of 3.9% across 21 provinces, indicating a potential return to approximately 18 trillion yuan in total tax revenue [19][20]. - The anticipated recovery in tax revenue is supported by a predicted slight improvement in PPI and manageable declines in credit growth, which are expected to stabilize tax income [18]. - Tax reform is seen as a critical opportunity, with the need to address the declining share of tax revenue in GDP and the necessity for adjustments in the central-local fiscal relationship, particularly in light of pressures from the real estate sector [20].