Chongqing - Germany’s planned tax on sugary drinks, due in July 2027, reflects a wider global debate over how to curb excessive sugar consumption. In China, economists and public health researchers are weighing whether a similar tax’s potential health benefits and revenue would outweigh the costs for consumers and beverage companies.
Sugar-free drinks on the shelves at a MUJI store in SKLP shopping mall, Chongqing. (Photo/Zheng Ran)
Under Germany's proposed scheme, drinks containing at least 5 grams of sugar per 100 milliliters would face a tax of €0.26 (approx. 0.29 U.S. dollars) per liter, rising to €0.32 for beverages containing 8 grams or more. The government expects the measure to generate about €690 million in 2027 and €925 million in 2028, while encouraging manufacturers to reduce sugar content. The proposal still requires parliamentary approval.
The debate reflects a wider shift in public health policy. The World Health Organization (WHO)'s "3-by-35" initiative calls on governments to raise the real prices of tobacco, alcohol and sugary drinks by at least 50% by 2035 through health taxes, aiming to reduce harmful consumption and generate public revenue.
Countries have adopted different approaches to taxing sugary drinks. From January 2028, the United Kingdom plans to lower the sugar threshold for taxation from 5 grams to 4.5 grams per 100 milliliters and remove exemptions for certain milk-based and plant-based drinks. The United Arab Emirates introduced a tiered, volume-based tax in January 2026, linking the levy per liter to a drink's sugar content. Mexico, meanwhile, set a tax of 3.08 pesos per liter on flavored beverages containing added sugars and 1.5 pesos per liter on those containing added sweeteners from January 2026.
China has not announced a nationwide sugary-drink tax or an implementation timetable. The issue is being discussed by researchers as the country advances consumption tax reform and prepares to introduce mandatory sugar and saturated-fat labeling for prepackaged foods on March 16, 2027.
China's revised General Rules for Nutrition Labelling of Prepackaged Foods (GB 28050-2025), published in 2025 and scheduled to take effect in March 2027, upgrades the existing "1+4" labeling framework to "1+6," making sugar and saturated fat mandatory labeling items for the first time. The changes will give consumers more information about the nutritional content of packaged foods, while providing a clearer basis for comparing products.
The potential health and fiscal gains
Researchers argue that sugary drinks create costs beyond the price paid at checkout, including treatment for obesity-related conditions, diabetes and dental disease.
Zheng Rong, a professor at the University of International Business and Economics and director of a WHO collaborating center on health taxes and fiscal policies, said consumer support for taxation and manufacturers' willingness to reduce sugar content have increased.
Her research team examined 21 soft drinks from a leading brand in China's beverage market and found an average sugar content of 27.7 grams per 500 milliliters. China's dietary guidelines recommend that adults preferably limit daily sugar intake to no more than 25 grams.
A domestic study led by Zheng estimates that a sugary-drink tax resulting in retail price increases of 20% or 30% could generate 170.2 billion yuan or 236.4 billion yuan, respectively, in consumption tax revenue. These are modeled scenarios, not official government forecasts. Actual revenue would depend on tax design, product coverage, and changes in consumer behavior.
Ma Guansheng, a professor at Peking University's School of Public Health, cited a cost-effectiveness model based on China's population that estimated a 20% tax increase on sugary drinks could avert 59.8 million disability-adjusted life years (DALYs). A DALY represents one year of healthy life lost due to premature death or illness and disability.
Zhang Shanshan, an associate professor at the National Center for Stomatology, said preliminary estimates indicate that excessive sugary-drink consumption contributes to more than 10 million new cases of dental caries in China annually. Treatment adds costs for households and the healthcare system.
Who would pay the tax?
For beverage makers, the central issue is how much of any additional tax would be passed on to consumers and how much companies would absorb through lower margins.
Huang Jidong, a distinguished professor at Yunnan University, said China's competitive beverage market differs from its state-controlled tobacco industry, where producers can absorb tax increases by reducing monopoly profits. Beverage companies operate in a more competitive market, making it difficult to absorb the entire tax burden without affecting prices. The extent of any price increase would depend on consumers' sensitivity to higher costs.
That creates different pressures across the industry. Companies could raise prices, accept lower margins, or reformulate products to reduce their sugar content. A tiered tax linked to sugar concentration could make reformulation a more attractive option for manufacturers seeking to avoid higher rates.
International experience offers an example. In Britain, beverage companies were given roughly two years to prepare before a sugar-tax scheme took effect. An expert cited in the research materials said more than half of manufacturers had changed their recipes during that period.
The challenge of sugar substitutes
Another unresolved question is whether a tax should cover only sugar-sweetened beverages or extend to products marketed as sugar-free.
Huang said exempting artificially sweetened drinks could encourage consumers to switch from taxed beverages to untaxed alternatives. However, he noted that medical evidence on sugar substitutes remains insufficient to determine the most appropriate tax treatment.
Ma similarly warned against presenting zero-sugar drinks as automatically healthy, particularly when marketing them to children and adolescents.
Zheng proposed a hybrid tax system that would combine volume-based rates linked to sugar content with value-based levies on certain other products. She suggested considering artificially sweetened and freshly prepared drinks, as well as dairy drinks and powdered instant beverages, to reduce substitution toward untaxed categories.
Such an approach would raise practical challenges. Packaged beverages have standardized nutrition labels, while freshly prepared products such as milk tea and fruit tea can vary in ingredients, sugar content, and serving sizes.
Chinese tea chain CHAGEE offers customizable sugar levels, from sugar-free to light, half, and full sugar, according to customers' preferences. (Photo/Zheng Ran)
A policy debate, not a government decision
China's revised nutrition-labeling standards will require sugar and saturated fat to be disclosed on prepackaged foods from March 2027. The change could give consumers more information about sugar intake, but it does not establish a tax on sugary drinks.
Ren Minghui, director of Peking University's Institute for Global Health, said effective reform should connect price incentives, disease prevention, public financing and accountability rather than focus solely on tax rates.
Researchers have called for further assessment of which products should be covered, how taxes should be collected and how much time manufacturers would need to adjust their products.
For now, China's sugar-tax discussion remains among researchers and policy specialists. Whether the country should follow other markets will depend not only on projected health benefits and revenue, but also on how a tax would affect household spending, business costs and consumer choices.