Many municipalities in China are heavily indebted and suffer from a lack of revenue. The Chinese leadership is therefore trying to keep public debt under control, especially that of local governments, and is considering introducing a property tax to strengthen the financial power of municipalities. For this reason, the Budget Affairs Commission (BAC) of the Standing Committee of the National People’s Congress of the People’s Republic of China is interested in the constitutional debt brake of the German Basic Law as well as the recently reformed property tax in Germany, the revenues of which flow to the municipalities.
Together with the BAC, the Sino-German Legal Cooperation Program of the Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH therefore organized a study tour on the subject of national debt and property tax on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) from 21 to 24 May 2025. The six-member delegation was led by Vice Minister HE Chengjun, deputy chairman of the Budget Affairs Commission.
On May 21, Dr. Marco Haase, Head of the Sino-German Legal Cooperation Programme at GIZ, presented the state structure of the Federal Republic of Germany and reported on the debt situation in Germany. Mr. Sebastian Klöppel, Housing Officer at the German Association of Cities, the umbrella organization of German cities, then explained social housing in Germany. He reported on the structure of the German housing market, which differs considerably from the Chinese housing market due to the high proportion of rental housing, and explained the basic idea of social housing in Germany: the public sector grants low-cost loans and subsidies for construction, in return for which the investor grants low rents for people on low incomes for the term of the loan. The topic was particularly important for the delegation because China wants to prevent the introduction of a property tax from driving up housing costs, especially for people on low incomes.
At the Federal Ministry of Finance, Dr. Elke Baumann, head of the sub-department for fundamental financial policy issues, reported on the reform of the debt brake. In turn, Mr. HE Chengjun presented the current development of public debt in the People’s Republic of China. The delegation then held an expert discussion with Prof. Dr. Christian Waldhoff, Professor of Public Law and Financial Law at Humboldt University in Berlin, on the reform of the debt brake from a constitutional law perspective. The discussion focused, for example, on the questions of how the new debt limit for the federal states is divided up between the states and the advantages and disadvantages of a constitutional limit on debt based on numerical criteria as opposed to a limit based on evaluative concepts.
In the evening, the Vice President of the Bundestag, Mr. Omid Nouripour, received the delegation in the Bundestag. Mr. Nouripour and Mr. He spoke out against protectionism and in favour of intensifying parliamentary exchange.
On the morning of May 22, the delegation visited the Berlin-Brandenburg Fiscal Court in Cottbus. Mr. Rüdiger Schmittberg, Vice President of the Fiscal Court, as well as Presiding Judge Prof. Dr. Susanne Tiedchen, Judge Dr. Marius Schumann and Judge Dr. Katarina Günther presented the German fiscal jurisdiction and the first disputes in property tax law. During the discussion, the delegation wanted to know, for example, what the chances of success were for lawsuits before the tax court, which areas of law were particularly prone to disputes and what qualifications lay judges had to have.
In the afternoon, State Secretary Sebastian Hecht received the delegation at the Saxon State Ministry of Finance in Dresden. Dr. Ute Röder, Head of the Department for Sales and Excise Taxes, Transport Taxes, and Mr. Thomas Weihermüller, Head of the Tax and City Treasury Office of the State Capital Dresden, presented the property tax in Saxony. Ms. Röder and Mr. Weihemüller explained in particular the federal model for calculating property tax and the deviations of the Free State of Saxony from this federal model.
Mr. Christian Holzhey, Head of the Tax Office I of the City of Leipzig, welcomed the delegation on 23 May. Ms. Eternach and Mr. Semm, employees of the tax office, reported on the extensive preparations for the first-time collection of property tax in accordance with the reformed property tax legislation. They presented the internal staff training and the information campaigns for the public. In addition, they explained the individual factors that are relevant for determining the property tax value and concluded by discussing typical grounds for objection by citizens.
In the afternoon, Prof. Dr. Marc Desens, Professor of Public Law at the University of Leipzig, presented the German Fiscal Code as the central regulation of general tax law. In particular, he explained the relationship between the tax code and the individual tax laws, discussed the economic approach of the tax code, which aims to determine the true economic facts, which may differ from the legal situation under civil law, and presented the tax administration act as the central form of action of the tax authorities. The subsequent discussion focused on the relationship between the German Fiscal Code and the German Basic Law as well as the extent to which digitalization requires a reform of tax law.
The intensive technical discussions on limiting public debt and reforming property tax in Germany provided the delegation with numerous suggestions for its own efforts to keep public finances in China on track and avoid risks to global financial stability.