China’s pre­mier says tax cuts sup­port em­ploy­ment, eco­nomic sta­bil­ity

Iran Daily - - Tse & Global Economy -

China’s plans for tax cuts tar­get­ing smaller com­pa­nies will help to sup­port em­ploy­ment and eco­nomic sta­bil­ity, and will ex­pand the coun­try’s tax base over the long term, Pre­mier Li Ke­qiang was quoted as say­ing on Saturday.

“Im­ple­ment­ing tax cuts for small and micro en­ter­prises is mainly to sup­port em­ploy­ment,” Li said in com­ments posted on the Chi­nese govern­ment’s web­site, ac­cord­ing to Reuters.

De­vel­op­ing and strength­en­ing small com­pa­nies is linked to eco­nomic sta­bil­ity and sta­ble em­ploy­ment, he said.

“Look­ing at the long term, this will con­tinue to ex­pand the tax base, con­serve tax re­sources and ul­ti­mately achieve wins for mass em­ploy­ment, cor­po­rate prof­its and fis­cal rev­enues,” he was quoted as say­ing, re­fer­ring to the cor­po­rate tax cuts.

Li’s com­ments come amid grow­ing of­fi­cial con­cern over China’s slow­ing eco­nomic growth and its im­pact on the la­bor mar­ket.

Chi­nese au­thor­i­ties plan to set a lower eco­nomic growth tar­get of six to 6.5 per­cent in 2019, com­pared with ‘around’ 6.5 per­cent in 2018, sources told Reuters, as weak­en­ing domestic de­mand and a dam­ag­ing trade war with the US drag on busi­ness ac­tiv­ity and con­sumer con­fi­dence.

An­a­lysts ex­pect that China’s econ­omy grew around 6.6 per­cent last year, its slow­est pace since 1990, and it is ex­pected to cool fur­ther in com­ing months be­fore a slew of sup­port mea­sures start to kick in.

“The bot­tom line for the pol­i­cy­mak­ers is so­cial sta­bil­ity, which is cru­cially tied to the un­em­ploy­ment rate and job cre­ation,” an­a­lysts at BOAML said in a re­cent note.

“With Us-china trade risks still loom­ing large, we be­lieve pol­i­cy­mak­ers would not hes­i­tate to take pre-emp­tive mea­sures to sta­bi­lize ex­pec­ta­tions on job sta­bil­ity.”

More growth boost­ing steps are ex­pected this year as pol­i­cy­mak­ers seek to avert the risk of a sharper slow­down.

China’s State Coun­cil, or cabi­net, said on Jan­uary 9 that it would fur­ther re­duce taxes for smaller com­pa­nies. On Fri­day, Fi­nance Min­is­ter Liu Kun said au­thor­i­ties would step up tax and fee cuts to lower cor­po­rate bur­dens.

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