The Chinese government is considering tax incentives for some manufacturers in China to stimulate the economy. With this, the country wants to focus on technological innovation to compete with the United States. Insiders report it to the Bloomberg news agency.
The new tax policy could save some producers hundreds of billions of yuan, one of the sources said. For comparison, 100 yuan is equivalent to about 13 euros. However, the plans are not yet finalized and also need to be approved. Analysts had already predicted that China would opt for such measures to boost business confidence.
President Xi Jinping earlier this month listed a “modern industrial system” as one of China’s top economic priorities. Support for the country’s most advanced manufacturing companies was also discussed in May. These span a diverse range of industries, such as raw materials, chips, artificial intelligence (AI), and biopharmaceuticals.
Momentum lost
China’s economy is losing momentum, following a recovery in the aftermath of the coronavirus crisis. The latest data shows that exports and investment are declining across the board. Youth unemployment is also reaching record levels. Chinese stocks also tumbled, as did the prices of key commodities such as copper and iron ore.
The government had already announced 1.8 trillion yuan in tax breaks for this year. The fact that this amount could be increased further could indicate that Chinese government officials are concerned about the outlook for the economy. Last year, Beijing allocated a record 4.2 trillion yuan to stimulate the economy.
Source: BNR
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