China’s Smoking Paradox: Low Taxes Undermine Health Goals

China is home to the world’s largest smoking population, with approximately 350 million smokers — roughly 30% of all smokers worldwide, according to the World Health Organization. A viral incident in Shenzhen this April, where a woman confronted a smoker at a bus stop and was met with hostility, has reignited public debate over smoking restrictions and the country’s long-stalled tobacco tax policy. Public health experts warn that low cigarette taxes — unchanged since 2015 — are undermining Beijing’s “Healthy China 2030” goals, which aim to reduce the smoking rate among adults aged 15 and above to 20% by 2030.

The Scale of the Problem

China accounts for approximately 46% of all cigarettes sold globally — some 2.4 trillion cigarettes per year. While the smoking rate among adults aged 15 and above has declined from 28.1% in 2010 to 24.1% in 2022, the pace of decline has slowed significantly. The male smoking rate, though down from 52.9% to 45.3% over the same period, remains among the highest in the world. Female smoking in China remains below 2%.

Xiao Lin, director of the Tobacco Control Office at the Chinese Center for Disease Control and Prevention, told a seminar in February 2025 that “the decline in smoking rate has slowed. China’s smoking rate still needs to drop 4.1 percentage points more to meet the 2030 target.” With just over three years remaining, experts say the goal is increasingly difficult to achieve without significant new policy interventions.

The Tax Gap

China last raised the consumption tax on cigarettes in 2015, increasing the wholesale-stage rate from 5% to 11% and introducing a specific tax of RMB 0.005 per cigarette. Since then, the tax framework has remained largely unchanged. The total tax burden on cigarettes now stands at approximately 51% of the retail price — well below the WHO’s recommended benchmark of roughly 75%.

Professor Li Weiren of the University of Chinese Academy of Social Sciences has noted that between 2016 and 2020, the average cigarette price in China was about RMB 13.5 per pack, representing an increase of less than 10% compared with 2008. After accounting for inflation and rising consumer purchasing power, the real price of cigarettes has effectively declined.

Professor Zheng Rong of the University of International Business and Economics (UIBE) argues there is room to act. “Theoretically, there is still room to further increase taxes on cigarettes,” she said at the same seminar. Citing a price elasticity of demand of approximately -0.7 in China — meaning a 10% price hike would lead to a 7% drop in demand — Zheng noted that “raising tobacco taxes, and prices in turn, can produce an immediate and significant reduction in consumption and demand.”

The Fiscal Dilemma

The tobacco industry remains a massive economic force in China. In 2025, the 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% year-on-year. Tobacco accounts for roughly 53% of China’s total consumption tax revenue — approximately 890 billion yuan (US$129 billion) — and the industry contributes about 7.3% of national fiscal revenue.

This creates a fundamental tension: the same industry that fills state coffers also imposes enormous healthcare and productivity costs. Smoking causes approximately 1 million deaths per year in China, according to data published in The Lancet. A recent study by UIBE found that the tobacco industry causes greater damage to the national economy than it contributes when these costs are factored in.

Reform on the Horizon?

China’s 2026 “Two Sessions” — the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference — revived discussion of consumption tax reform. Premier Li Qiang’s government work report on March 5 called for optimizing the consumption tax’s scope and rates and moving the tax collection stage for some items further downstream.

However, the proposed reforms carry risks. Senior tobacco control expert Xu Guihua has warned that consumption tax revenue from products like tobacco and alcohol should not be allocated to local governments, as this “would incentivize them to boost and not reduce sales of such goods.” If local governments directly benefit from tobacco sales, they may be less willing to enact or enforce smoking restrictions.

Alan Zhao, CEO of 2Firsts, observed that “research and policy debate surrounding tobacco consumption tax will likely continue. These discussions are also linked to broader policy frameworks such as the high-quality development of China’s tobacco industry and the country’s ‘Healthy China’ strategy.”

A Social Barometer

The viral Shenzhen incident in April 2026, in which a woman was berated and had a plastic bottle thrown at her after asking a smoker to extinguish a cigarette at a crowded bus stop, reflects growing public frustration with smoking in shared spaces. Online debate showed strong support among younger Chinese for stricter restrictions, suggesting shifting social norms that could support stronger policy action.

What’s Next

China faces a narrowing window to achieve its “Healthy China 2030” target. With the smoking rate at 24.1% and the clock ticking toward 2030, the question is no longer whether higher taxes can reduce smoking — the evidence is clear — but whether Beijing can overcome the fiscal and political barriers to raising them. The outcome will have profound implications not only for the health of China’s 1.4 billion people, but for global tobacco control efforts as a whole.