$500 idea · Pattern break · China · Edition 006
Second-hand books are China's only resale with no VAT and no ceiling.
中华人民共和国增值税法 第二十四条 第（三）项, in force 1 January 2026, exempts "古旧图书，自然人销售的自己使用过的物品" [antiquarian and second-hand books; items a natural person has used]. Two limbs, and only the second carries the words 自然人. Every other resold object is 旧货, which 财政部 税务总局公告2026年第10号 taxes at 3% 减按2% and defines as "进入二次流通的具有部分使用价值的货物…但不包括自己使用过的物品". So a registered company reselling a used book pays nothing, at any scale, forever — and on 1 September 2026 the publishing regulator opened a draft that would make that company get a licence.
China's second-hand book trade runs from the waste yard upward. Paper mills buy mixed waste paper by the tonne and pulp it without looking at the titles; dealers and individuals intercept that stream, pull out the volumes worth more than their paper, and sell them one by one online. Normally the state's grip on any such trade is the tax code, and normally there is a cap on how much relief a small seller may take before the reliefs stop. Here there is no tax and no cap, so this edition looks at what the state is using instead.
The money first. Starting capital is ¥3,359.00 [$500 USD] and the target is ¥33,590 a month [about $5,000 USD], ¥403,080 a year, struck at the China Foreign Exchange Trade System's central parity of 6.7180 published 23 October 2026. This week's route is to stand between the paper mill and the reader: buy printed matter at the weight price, sell a fraction of it at the title price, and pay no value-added tax on either leg because the statute says so.
The exemption is older than the Law but weaker in its old form. 增值税暂行条例 (国务院令第538号, in force 1 January 2009) 第十五条 listed "（三）古旧图书" and, four items later, "（七）销售的自己使用过的物品" — two separate reliefs at State Council rank, which the State Council could have withdrawn at a meeting. 增值税法 第二十四条 merges them into one item of statute and, in merging, inserts 自然人 in front of the second limb only. The drafting is deliberate. Used clothes, used phones, used machinery: exempt only if the seller is a natural person. Books: exempt full stop.
That matters because the 2026 transitional announcement is what everyone actually reads, and it taxes everything else. 公告2026年第10号, dated 30 January 2026, keeps 旧货 at 3% 减按2%, keeps the 小规模纳税人 threshold at ¥100,000 of monthly sales to 31 December 2027, and reduces the 3% 征收率 to 1% over it. It also writes "小规模纳税人（不含自然人）销售自己使用过的固定资产" — the bracket exists because the Law has already taken natural persons out. None of this touches 古旧图书, because an item of 第二十四条 cannot be reached by an announcement.
So where is the state's hand? Not the tax bureau. 出版物市场管理规定 (国家新闻出版广电总局、商务部令第10号, in force 1 June 2016) 第三条 is categorical: "未经许可，任何单位和个人不得从事出版物批发、零售活动" [without a permit, no unit and no individual may engage in the wholesale or retail of publications], and 第十五条 extends it to anyone distributing over the internet. On 1 September 2026 国家新闻出版署 put the first revision since 2016 out for comment, closing 30 September. 新华社 reports the draft adding the clause that has never existed before: "持续开展二手出版物收购、销售等经营活动的，应当依法办理出版物经营许可证" [those who continuously carry on the business of buying and selling second-hand publications shall obtain a publication business permit].
The non-consensus reading is that this trade was never grey on tax and is not being taxed now. It is being licensed. And the licence is enforced on turnover, not on profit, which inverts the usual arithmetic. 出版管理条例 (国务院令第343号, sixth amendment 6 December 2024) 第六十一条 confiscates the publications, the proceeds and the equipment and adds "违法所得5倍以上10倍以下的罚款". Shanghai's own discretion benchmark, 沪文旅规〔2021〕5号 item 21, keys the bands to 违法经营额 instead: under ¥5,000 a fine to ¥30,000; ¥5,000 to ¥10,000 a fine of ¥30,000 to ¥50,000; and at ¥10,000 or more, "并处违法经营额6倍以上8倍以下罚款" in the ordinary case. This is not theoretical. On 30 December 2025 广州市增城区文化广电旅游体育局 penalised 刘磊 under 穗增文综罚字〔2025〕16号 for selling publications through a 闲鱼 account with no permit, citing 出版物市场管理规定 第三条第一款 and 出版管理条例 第六十一条.
Run the two numbers against each other and the trade's real price list appears. At the target, monthly turnover is ¥43,677.03. A year of the 2% a dealer would pay on 旧货 is ¥10,482.49. One month of that same turnover at Shanghai's minimum ordinary multiple is ¥262,062.20 — exactly 25.0× the tax, because 6 ÷ (0.02 × 12) = 25 and the ratio does not depend on how much you sell. The statute hands you ¥10,482 a year; the missing permit takes back 7.80 to 10.40 months of income on one month's books.
Who is on the other side? 山鹰国际控股股份公司 (600567), 法定代表人 吴明武, one of the largest buyers of recovered paper in the country. Its 2025 annual report, filed 29 April 2026, shows revenue of ¥28,778,168,738.13, a net loss attributable to shareholders of ¥1,135,602,749.34, and 7,546,000 tonnes of paper produced against 7,486,000 sold. The same report puts the national average price of domestic recovered paper in 2025 at ¥1,568 a tonne, up ¥81 or 5.45% on 2024. That is the bid under every book in China, and it is title-blind. Against it, 2024年新闻出版统计公报 reports 259.0亿 copies sold through the main channel at a list value of 4,875.4亿元 — an average cover price of ¥18.8239, which is 34.30× what the same volume fetches as pulp. The mill cannot read. That gap is the whole trade, and the statute leaves all of it untaxed.
The evidence
12 findingsOne item of statute, two limbs, and only one of them says 自然人
第二十四条: "下列项目免征增值税：…（三）古旧图书，自然人销售的自己使用过的物品；" [The following are exempt from value-added tax: … (3) antiquarian and second-hand books; items a natural person has sold that they themselves have used.] 第三十八条 repeals 增值税暂行条例 on the same date. 第九条 defines a 小规模纳税人 as one under ¥5,000,000 of annual taxable sales and 第二十三条 makes the 起征点 a State Council matter — neither of which conditions 第二十四条, which carries no ceiling, no registration test and no seller-status test on its first limb. 国家税务总局上海市税务局.
What the Law changed: the two reliefs were separate, and neither said 自然人
第十五条 listed them four items apart: "（三）古旧图书；" and "（七）销售的自己使用过的物品。" The second paragraph added that, apart from these, "增值税的免税、减税项目由国务院规定" [VAT exemptions and reductions are prescribed by the State Council] — which is what made the old relief revocable without the legislature. 增值税法 lifts both to statute, fuses them into one item, and writes 自然人 into the used-items limb alone. 中国政府网 国务院公报.
Everything else second-hand is 旧货, and 旧货 pays 2%
"自2026年1月1日起，销售旧货，按照简易计税方法依照3%征收率减按2%计算缴纳增值税。" The definition: "旧货，是指进入二次流通的具有部分使用价值的货物（含旧汽车、旧摩托车和旧游艇），但不包括自己使用过的物品。" The bracket that proves the Law's drafting: "小规模纳税人（不含自然人）销售自己使用过的固定资产，按照简易计税方法依照3%征收率减按2%计算缴纳增值税。" The announcement also sets the threshold to 31 Dec 2027 — "以一个月为一个计税期间的，起征点为月销售额10万元" — and reduces the 3% 征收率 to 1%. None of it reaches 第二十四条. 中华人民共和国财政部.
The permit, not the tax, is the gate — and it covers individuals and the internet
第三条: "从事出版物批发、零售活动的单位和个人凭出版物经营许可证开展出版物批发、零售活动；未经许可，任何单位和个人不得从事出版物批发、零售活动。" 第十五条 requires anyone distributing over the internet to hold that permit first and to file with the issuing authority within 15 days of starting. 第九条 and 第十条 set the conditions — business registration, retail in scope, a fixed premises — and route the application to the 县级 publishing authority. 第二十六条 puts the platform itself on the hook: "为出版物发行业务提供服务的网络交易平台应向注册地省、自治区、直辖市人民政府出版行政主管部门备案". 中国政府网 国务院公报.
The draft names second-hand publications for the first time
新华社 reports the draft adding, as the fourth of five changes, that units and individuals carrying on a continuous for-profit business of buying and selling second-hand publications must hold the permit and keep purchase and sale records: "持续开展二手出版物收购、销售等经营活动的，应当依法办理出版物经营许可证" [those continuously carrying on the business of buying and selling second-hand publications shall obtain a publication business permit in accordance with law]. The same draft tightens retail approval to one permit per business address and extends licence-checking and transaction-record duties to online platforms. The 2016 Regulation nowhere uses the words 旧书, 古旧图书 or 二手. 新华网 · 国家新闻出版署.
The penalty is a multiple, and the confiscation comes first
第六十一条 reaches anyone who "未经批准，擅自设立出版物的出版、印刷或者复制、进口单位，或者擅自从事出版物的出版、印刷或者复制、进口、发行业务". The authority confiscates the publications, the illegal proceeds and the tools and equipment used, and then: "违法所得5万元以上的，并处违法所得5倍以上10倍以下的罚款；没有违法所得或者违法所得不足5万元的，并处25万元以下的罚款". 国家市场监督管理总局.
Shanghai swaps the base from proceeds to turnover, which is the whole difference
Item 21 applies 出版管理条例 第六十一条 to unlicensed distribution and keys every band to 违法经营额, not 违法所得. "违法经营额不足5千元的" draws confiscation "并处3万元以下罚款"; "违法经营额5千元以上不足1万元的" draws "并处3万以上5万元以下罚款"; at ¥10,000 or more the multiples are "违法经营额5倍以上6倍以下" where the operator stopped voluntarily during the case, "并处违法经营额6倍以上8倍以下罚款" in the ordinary case, and 8 to 10 times where there is a prior sanction for the same conduct or banned matter exceeds half the stock. 上海市文化和旅游局.
刘磊 sold books on 闲鱼 without the permit and lost the stock
The disclosure names 刘磊, an individual, who without an 出版物经营许可证 sold publications through a 淘宝闲鱼 account; the bureau found this to be unauthorised distribution of publications, cited 出版物市场管理规定 第三条第一款 and 出版管理条例 第六十一条, and imposed confiscation of the publications plus a fine. The record notes he cooperated, admitted the facts, produced evidence and refunded the purchase money. The marketplace was a consumer resale app, not a bookshop — which is the point. 广州市增城区人民政府.
The bid under every book is ¥1,568 a tonne, and the bidder lost ¥1.14bn
Revenue ¥28,778,168,738.13, down 1.54%; net loss attributable to shareholders ¥1,135,602,749.34. Paper output 7,545,400 tonnes, up 4.22%, against sales of 7,486,000 tonnes, a 99.21% sell-through. The report puts the 2025 national average price of domestic recovered paper at ¥1,568 a tonne, up ¥81 or 5.45% on 2024, citing 卓创资讯. The mill pays that price for a tonne of Dickens and a tonne of junk mail alike. 巨潮资讯网.
259.0亿 copies at 4,875.4亿元 of list value, and a distribution industry earning 6.33%
"全国新华书店系统、出版社自办发行单位出版物总销售数量 259.0 亿册（份、盒、张），较 2023 年降低 3.5%；定价总金额 4875.4 亿元，增长 0.1%。" Books: "全国新版图书 22.8 万种，较 2023 年增长 5.0%；重印图书 32.2 万种，降低 0.4%；总印数 119.8 亿册（张），降低 4.1%。" Book publishing turned over ¥116.06bn for ¥21.42bn of profit, an 18.4560% margin; publication distribution turned over ¥332.86bn for ¥21.06bn, a 6.3270% margin, down 7.7% on the year. 国家新闻出版署.
¥18.8239 a copy against ¥0.5488 of paper: the title is worth 34.30× the pulp
Average list price = 487,540,000,000 ÷ 25,900,000,000 = ¥18.8239 a copy. At a stated 0.35 kg a volume, one tonne is 1,000 ÷ 0.35 = 2,857.14 volumes, so the recovered-paper bid of ¥1,568 a tonne values one volume at 1,568 ÷ 2,857.14 = ¥0.5488. The ratio is 18.8239 ÷ 0.5488 = 34.30×. The stake buys 3,359 ÷ 1,568 = 2.1422 tonnes, or 6,120 volumes, outright.
¥10,482.49 of tax saved a year against ¥262,062.20 of fine on one month's books
Target ¥33,590 × 12 = ¥403,080. At a 10% sort yield and the ¥18.8239 average price: 6.4331 t = 18,380 volumes acquired, 1,838 sold at title for ¥34,598.70, 5.7898 t of remainder back to pulp for ¥9,078.33, turnover ¥43,677.03, cost ¥10,087.03, net ¥33,590.00. A dealer's 2% on that turnover is ¥873.54 a month, ¥10,482.49 a year. Shanghai's ordinary band on one month of it is 6 × 43,677.03 = ¥262,062.20 to 8 × = ¥349,416.26, which is 7.80 to 10.40 months of target income. The ratio of the minimum fine to a year of the tax is 6 ÷ (0.02 × 12) = 25.0× whatever the turnover.
The ladder
From $500 to $5,000 a month · ¥3,337 → ¥33,372古旧图书 and 自然人销售的自己使用过的物品 are separate exempt items sharing one line. The first has no seller test, no ceiling and no registration condition; the second applies only to a natural person. Every piece of advice that tells you to stay unregistered to keep the exemption is advice about the second limb. On books it is simply wrong, and it costs you the permit the trade actually turns on.
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Read 第二十四条 第（三）项 as two limbs, because the comma is the whole asset
古旧图书 and 自然人销售的自己使用过的物品 are separate exempt items sharing one line. The first has no seller test, no ceiling and no registration condition; the second applies only to a natural person. Every piece of advice that tells you to stay unregistered to keep the exemption is advice about the second limb. On books it is simply wrong, and it costs you the permit the trade actually turns on.
古旧图书 · exempt regardless of who sells it -
Get the 出版物经营许可证 before the first listing, not after the first sale
出版物市场管理规定 第三条 bars 任何单位和个人 from retailing publications without it, and 第十五条 catches internet distribution specifically. The application goes to the 县级 publishing authority under 第十条 and needs business registration, retail in scope and a fixed premises under 第九条. This is the cheapest rung on the ladder and the only one that cannot be skipped — 刘磊 skipped it and lost his stock on 30 December 2025.
第十条 · 县级出版主管部门 approves it -
Buy at the weight price, because the mill cannot read
山鹰国际's 2025 accounts put domestic recovered paper at ¥1,568 a tonne, and that bid is indifferent to what is printed on the pages. Your acquisition cost is therefore fixed and public, and it is the same for a tonne of pulp fiction and a tonne of out-of-print monographs. The ¥3,359 stake buys 2.1422 tonnes, roughly 6,120 volumes, before anything has been sorted.
3,359 ÷ 1,568 = 2.1422 t ≈ 6,120 volumes -
Solve for sort yield, because it is the only term in the equation
The unsold remainder goes back to the mill at the price you paid, so the residual washes and the entire margin is y × (2,857.14p − 1,568). At the official ¥18.8239 average cover price, a 10% yield earns ¥5,221.47 a tonne and a 20% yield earns ¥10,442.94. Doubling the yield doubles the income; doubling the capital does not. Everything you spend on cataloguing, condition grading and knowing which 重印 editions are scarce is spent on the only variable that moves.
margin/tonne = y × (2,857.14p − 1,568) -
Turn the stake three times a month rather than trying to enlarge it
At a 10% yield and the average cover price the target needs 6.4331 tonnes a month, which is 3.00 turns of what ¥3,359 buys. One turn alone suffices only at a 30.03% yield, and at a 20% yield you still need 1.50 turns. Because VAT is nil on both legs there is no filing cycle holding the float, so the limit on turns is how fast you can sort, list and ship — not how fast the state releases your money.
6.4331 ÷ 2.1422 = 3.00 turns/month -
Keep 进销货凭证 from the start, because the draft makes records the second condition
The September 2026 draft pairs the permit requirement for continuous second-hand dealing with a duty to keep purchase and sale vouchers, and 第二十四条 of the current Regulation already requires anyone distributing publications to check their supplier's permit, keep a copy and retain the non-financial 进销货清单 for at least three years. A waste yard will not issue you a permit copy. Build the record on your side before the rule lands.
进销货清单 · 3 years, 第二十四条 -
Price the downside on turnover, not on profit, and the permit stops looking optional
Shanghai's 沪文旅规〔2021〕5号 item 21 multiplies 违法经营额, so the fine scales with everything that passed through your hands, including the pulp leg you made nothing on. One month of turnover at the target draws ¥262,062.20 to ¥349,416.26 in the ordinary band. The statutory exemption is worth ¥10,482.49 a year against that, a ratio of exactly 25 to 1 that does not improve with scale.
6 ÷ (0.02 × 12) = 25.0, at any turnover
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