China's 25-Year Tax Reach Signals Financial Crisis, Analysts Warn

China is retroactively taxing wealthy citizens' offshore earnings, reaching back up to 25 years, a move that analysts interpret as a sign of financial distress. The policy, which freezes accounts until payment, is seen as a desperate measure to raise revenue. While taxing worldwide income is standard in the US and Europe, the retroactive nature undermines credibility and may prompt capital flight. Analysts note that China's banking system is short on dollars, the Belt and Road Initiative has stalled, and local governments are borrowing to pay interest, indicating a deepening crisis. Provincial debt, property market collapse, and overinvestment in energy infrastructure are cited as major concerns. Some predict a prolonged period of internal consolidation similar to Japan's post-1989 stagnation, with a potential crisis if mishandled. The possibility of a bailout refusal by Xi Jinping and provincial resistance could lead to bank failures and a Soviet-style deadlock.