- The Chinese government is considering stimulating the economy with tax breaks for some manufacturers, insiders tell Bloomberg News.
- The new tax policy could save some manufacturers hundreds of billions of yuan, a source said.
- However, the plans are yet to be finalized and need to be approved.
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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 US. Insiders inform the news agency about this Bloomberg.
The new tax policy could save some manufacturers hundreds of billions of yuan, a source said. By comparison, 100 yuan is equivalent to about 13 euros.
However, the plans are yet to be finalized and need to be approved. Analysts have already predicted that China will choose such measures to boost business confidence.
President Xi Jinping earlier this month listed a “modernized industrial system” as one of China’s top economic priorities. Support for the country’s most advanced manufacturing firms was discussed in May. These span a wide range of industries such as raw materials, chips, artificial intelligence (AI) and biopharmaceuticals.
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China’s economy has slowed after a brief recovery
China’s economy, which quickly revived after the corona crisis, is losing momentum. Recent data shows an overall decline in exports and investment. Youth unemployment is also at an all-time high. Chinese stocks have fallen, as have prices of key commodities such as copper and iron ore.
The government had already announced tax incentives worth 1.8 trillion yuan for this year. The fact that this amount could increase further may indicate that Chinese government officials are concerned about the outlook for the economy.
Last year, Beijing allocated 4.2 trillion yuan to stimulate the economy.