China Briefing | Opinion: Why is China worrying about Trump’s tax cuts? Here’s what it should be doing

“Why is China so worried about the United States’ tax cuts?”

This has become one of the top trending questions on social media in China since US President Donald Trump announced less than two weeks ago what was billed as the biggest tax cut for businesses and individuals in more than three decades.

The ensuing debate has focused on China’s own lopsided and much criticised tax regime, which is out of step and uncompetitive, and has reignited calls for the Chinese government to take more radical steps to overhaul the tax code to help spur economic growth.

Logically, the Chinese authorities should have welcomed the opportunity to help jump-start the issue. In fact, anticipating a new wave of tax cuts by major developed countries such as Britain and France, Premier Li Keqiang (李克強) chaired a State Council meeting in the middle of April to approve a raft of measures resulting in 380 billion yuan (HK$430 billion) in tax cuts, on top of 200 billion yuan in non-tax charges in the first quarter.

Noting that many countries were considering tax cut measures, Li reportedly said China should have the sense to “jump the gun” in the new round of global competition and employ effective measures to bolster the competitive edge of the Chinese firms.

In this context, China’s negative reactions to Trump’s tax cuts are mystifying, to say the least.