This chapter explores the history of the tobacco and wine taxes in Guangdong in the context of China's financial transformation. This case highlights the experience of Guangdong as a pioneering model for the Chinese fiscal state. The financial system of the central government in the Qing dynasty mainly relied on land taxes from the provinces, with few tax sources exclusively controlled by the central government. This financial structure did not change until the end of the late Qing dynasty. With the beginning of the Republican era, the central government sought to ensure its continued access to independent financial resources through a division between national and local taxes. The most prominent feature of China's financial transformation in the twentieth century was the growing importance of industrial and commercial taxes as a form of indirect taxes. Even in the twenty-first century, almost half of Chinese tax revenue is derived from indirect taxes, while the proportion of direct taxes, such as the income tax or the inheritance tax, remains low.

Of the several new taxes introduced in modern China, the tobacco and wine taxes were the only successful taxes that survived and developed into a main source of tax revenue during the Republican era. Under Nationalist rule, business taxes, income taxes, and other modern taxes were modestly and only partially introduced.