The G7’s groundbreaking agreement on international taxation, brokered at its meeting in the UK earlier this month, has received plaudits from many quarters. But one country that will be critical to making the plan a reality has remained notably silent: China.
The reticence among leaders of the world’s second-largest economy should come as little surprise. The deal, initially struck by finance ministers from seven advanced economies including the U.S. and Japan, could threaten Beijing’s long-favored tactic of using corporate tax breaks to support particular industries and regions. The Chinese government may also be wary of handing the Biden administration — for whom a global tax deal has been a priority — a major diplomatic victory.
“China can't be expected to cozy up to the U.S. on international tax the way American allies do,” says Wei Cui, a professor of tax law at the University of British Columbia and author of The Administrative Foundations of th
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