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Emma Ma

A recent incident in Shenzhen that went viral has put China’s widespread smoking habit under renewed scrutiny, reviving a long-running debate over whether Beijing should raise tobacco taxes for the first time in more than a decade.
On a rainy afternoon in April, a woman asked a smoker to put out a cigarette at a busy bus stop where nearly 10 people were waiting. The request led to a heated exchange, with the smoker arguing it was a public space, and ended with him throwing a plastic bottle at the woman before later apologising for his misconduct after police intervened.
The incident has sparked intense online debate, with growing numbers of young people calling for stricter restrictions. It has also sparked discussions among public health professionals and academics over whether Beijing should raise taxes on the industry amid mounting concerns over the economic and health costs of smoking.
Beijing last raised the consumption tax rate on cigarettes from 5 per cent to 11 per cent in 2015, but public health experts said it had not done enough to offset those costs.
A recent study by the Beijing-based University of International Business and Economics (UIBE) found that, rather than boosting economic growth and the central government’s fiscal revenue, the tobacco industry was in fact causing greater damage to the national economy.
In 2025, the tobacco industry’s combined net profit and tax revenue reached a record high of more than 1.65 trillion yuan (US$243.5 billion), up 3.5 per cent from the previous year, data from the State Tobacco Monopoly Administration showed. This figure was more than 4.4 times the annual profit of the Industrial and Commercial Bank of China, the world’s largest lender.
But Zheng Rong, a professor of taxation, public finance and health economics at UIBE who led the study on China’s tobacco industry, said the total economic gains collected from cigarette makers were largely outweighed by smoking-related costs.


Using statistics for 2020, the study found that China’s tobacco industry had generated 1.52 trillion yuan in tax revenue and cash dividends for the central government. But the costs – including medical insurance expenditures and economic losses from premature deaths – reached as high as 2.43 trillion yuan, 1.6 times the industry’s total fiscal contribution.
“For too long, the financial contributions of the tobacco industry have been the main topic when smoking is discussed in the country,” Zheng said in an interview. “What truly deserves attention is the heavy burden placed on the nation’s medical system – a problem that has become particularly prominent amid an ageing population.”
Raising tobacco taxes to invest part of the proceeds in public health, she added, would align with Beijing’s 15th five-year plan, the central government blueprint that sets economic and social priorities over a half-decade period.
“[It] would not only increase the fiscal revenue, but also ease the heavy burden on the country’s medical system and eventually improve labour productivity buoyed by people’s better health,” Zheng said.
The debate has taken on added significance as sluggish economic growth and a prolonged property sector slump continue to squeeze local government finances. Raising tobacco taxes, some argue, could support broader fiscal objectives.
But while public health professionals and academics have argued for higher taxes for years, tobacco duties remain relatively low by international standards. Those on a pack of cigarettes — including consumption tax, value-added tax and a tobacco leaf tax — accounted for about 50 per cent of the retail price, Zheng said. The World Health Organization recommends taxes of at least 75 per cent.
Some anti-smoking advocates believe the tobacco industry, particularly the state-owned giant China National Tobacco Corporation, is the main obstacle to tax increases.




“China Tobacco and the State Tobacco Monopoly Administration, which is supposed to govern the industry, are the same body,” an anti-smoking advocate, who asked not to be named, said in an interview. “Simply put, it’s one institution with two names. It’s why raising tobacco taxes is so difficult.”
A tax hike would increase costs for China Tobacco and could encourage more people to quit, leading to a further drop in profit.
China has the world’s largest tobacco industry in terms of both production and consumption. There are about 350 million smokers in China, according to the WHO, accounting for 25 per cent of the total population. The China-Japan Friendship Hospital in Beijing conducted a survey back in 2019 that found about 40 per cent of smokers intended to quit.
The WHO said in 2025 that for every 10 per cent increase in tobacco prices, consumption fell by about 4 per cent in high-income countries and by about 5 per cent in low- and middle-income countries. According to the World Bank, China falls into the latter category.
The South China Morning Post interviewed dozens of smokers in Shanghai aged between 20 and 50. None of them considered cigarettes in China to be expensive, with most finding them affordable.
“China is quite special. Cigarette prices in the country vary widely, ranging from less than 10 yuan (US$1.47) to over 100 yuan per pack. Among them, low- and middle-priced ones take over the most,” Zheng said. “Tobacco control in China will only be effective if tobacco taxes are raised substantially.”


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Public health experts warn low taxes on cigarettes risk undermining Beijing’s pursuit of a healthier population


Public health experts warn low taxes on cigarettes risk undermining Beijing’s pursuit of a healthier population.


China has the world’s largest smoking population. Is it harming the economy?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Public health experts warn low taxes on cigarettes risk undermining Beijing’s pursuit of a healthier population

Public health experts warn low taxes on cigarettes risk undermining Beijing’s pursuit of a healthier population