China: Xi’s tax reform shakes luxury, including made in Italy

by time news

On the one hand, “common prosperity”, on the other, the fight against climate change. Polluting luxury goods risk ending up in the middle of a double pincer in China. President Xi Jinping announced in August that tax reform will be introduced shortly. The contents have not yet been revealed but will be soon, on the occasion of the sixth plenum of the Chinese Communist Party scheduled between 8 and 11 November next. Four days during which Xi’s vision on the future of the People’s Republic will take shape. A vision in which there is no more room for uncontrolled development and there must also be less and less room for emissions that are not in line with Beijing’s environmental objectives.

China, luxury brands (including those of Made in Italy) fear Xi’s tax reform

That’s why, as Bloomberg explains trying to anticipate some of the contents of the tax reform that is actually being discussed in these weeks before the announcement with great fanfare during the Party plenary, we expect that tariffs will be significantly increased on all goods and products that involve a high amount of polluting emissions or a high consumption of energy. International luxury and apparel brands, including Italian ones, are eagerly awaiting. Also because the immense Chinese market now represents an irreplaceable and indispensable source of income for most of the world boutiques and made in Italy. Just remember what happened some time ago with D&G but not only. The producers of luxury goods know that in China they have to be there and the share of that market on the total of entries is constantly increasing.

That’s why there would be so much to lose now. This is not the only sector at risk. Xi tightened a number of sectors. Starting from the technological one, passing through the entertainment one and obviously to get to the real estate one. Beijing no longer wants uncontrolled development, high-risk debt investments, concentration of data and power in the hands of digital platforms. And at the same time he does not want an ostentation of wealth and behavior deemed “immoral” either. Everything revolves around the rhetoric of the redistribution of prosperity, which must become common by 2050, says Xi.

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