China cuts taxes, sees ‘tough struggle’ as growth slows
BEIJING: China’s premier warned on Tuesday that the country faces a “tough struggle” as he unveiled tax cuts to prop up a stuttering economy while increasing military spending to nearly $180 billion.
The slowdown and US trade war have become major challenges for President Xi Jinping, a year after becoming the country’s most powerful leader since Mao Zedong with the abolition of term limits and etching of his name into the constitution.
Premier Li Keqiang told the opening session of China’s annual National People’s Congress that the government is targeting growth of 6.06.5 per cent this year for the world’s second-largest economy, lowering its range from 2018.
Nearly 3,000 delegates from across the country gathered under tight security, with legislation aimed at improving conditions for foreign investors topping the agenda of the two-week session.
“In pursuing development this year, we will face a graver and more complicated environment as well as risks and challenges... that are greater in number and size,” Li said in his speech. “We must be fully prepared for a tough struggle,” he said.
The government had set a target of around 6.5 per cent in 2018 and eventually recorded official growth of 6.6 per cent — the slowest pace in nearly three decades. Three-quarters of provinces have already lowered their annual growth targets this year.
“We have made a moderate adjustment to our projection on the basis of a thorough assessment of destabilising factors and uncertainties affecting the economic performance,” Li said. To combat slowing growth, policymakers have said they will lower taxes, reduce fees and streamline red tape.
China will cut company taxes and employer social insurance contributions paid on behalf of workers by nearly 2 trillion yuan ($298 billion), Li said. The value-added tax for manufacturers will be lowered to 13 per cent from 16 per cent and drop one per cent for transportation and construction industries.