Title: China Implements Tax Cuts, Fee Reductions, and Financial Support to Boost Business Confidence
In the first half of the year, China implemented tax cuts, fee reductions, and tax refund deferrals amounting to 927.9 billion yuan ($145.3 billion) in an effort to stimulate economic growth and support business entities. These policies have been instrumental in reducing the burden on enterprises, bolstering their confidence, and enhancing their development vitality.
During a meeting of the Political Bureau of the CPC Central Committee on July 24, General Secretary Xi Jinping emphasized the need to make good use of policy space and promote high-quality economic development. The meeting called for the full utilization of monetary policy tools, particularly in supporting technological innovation, the real economy, and the development of small, medium, and micro enterprises.
Since the beginning of the year, various regions and departments have introduced policies to support the majority of business entities. As these policies have been gradually implemented and proven effective, they have significantly reduced the burden on enterprises, boosted their confidence, and increased their development potential. In the first half of the year, the country added 927.9 billion yuan in tax cuts and fee reductions, with small, medium, and micro enterprises benefiting the most, accounting for about 62% of the total.
Macroeconomic policies have been consistent, stable, and targeted, and there has been increased coordination and cooperation among different policy measures. Local governments have also innovated in their approaches to support, improving the effectiveness of policy implementation and assisting enterprises in easing operational pressure. This has resulted in strengthened confidence among enterprises to overcome challenges and resume development.
Monetary policy tools have played a dual role in supporting businesses, both in aggregate and structural ways. Credit support has been provided to enterprises, enabling them to open up financing channels and stimulate production. For instance, agricultural-related enterprises like Haiyun Zhenpin Tea Industry Co., Ltd. in Fujian Province have benefited from the confirmation of their rights, which has helped them secure financing and achieve successful tea production and sales.
Structural monetary policy tools have focused on key areas and weak links in the economy, including inclusive finance and technological innovation. The balance of inclusive small and micro loans saw a 26.1% YoY increase, and the weighted average interest rate of newly issued corporate loans decreased by 25 basis points compared to the same period last year.
To reduce the tax and fee burdens on enterprises, various institutional arrangements have been introduced. The income tax policy for small and micro enterprises and individual industrial and commercial households has been optimized, while the value-added tax collection rate for small-scale taxpayers has been reduced to 1%. Additionally, small-scale taxpayers with monthly sales of 100,000 yuan or less are exempt from value-added tax. These preferential tax and fee policies have provided significant relief to businesses, enabling them to secure funds for raw materials, expansion, and attracting new customers.
To enhance job stability and growth, measures like return subsidies and supply-demand docking have been implemented. Inner Mongolia, for example, has directly distributed funds to qualified enterprises, while Heilongjiang has provided support measures such as employment service specialists and training. Guangdong has established employment stations at high-speed rail stations, facilitating quick connections between job seekers and employers.
The combination of these supportive policies has fostered the recovery and resilience of private enterprises, which are the main drivers of economic growth. The number of newly established private enterprises has increased by 17.2% YoY, and the total number of tax-related business entities has risen by 7.5% YoY.
General Secretary Xi Jinping’s recent inspection in Jiangsu highlighted the importance of strengthening the dominant position of enterprises in technological innovation to promote industrialization. In line with this, China has incentivized investment in research and development and provided credit support for enterprises engaged in technological innovation. These policies aim to create new growth momentum and stimulate sustainable economic development.
As China continues to implement these policies and support business entities in the second half of the year, it is expected that the country’s economic growth will gain further momentum, providing stability and opportunities for businesses to thrive.