China needs to step up fiscal policy help for its economy – vice Finance Minister

BEIJING (Reuters) – China needs to step up fiscal policy assistance for its economy, Vice Finance Minister Zhu Zhongming said on Friday, adding the country will move steadily on implementing preferential tax and fee policies.

China will effectively ease tax burdens of small firms and household businesses as its small firms still face many difficulties and need more support, Zhu told a media briefing.

“Currently, the external environment is volatile, world economic growth is sluggish, and global trade is being impacted. The foundation for China’s economic recovery is not yet solid and the triple pressures of demand contraction, supply shocks, and weakening expectations remain significant,” Zhu said.

“To address these risks and challenges, it is necessary to step up finance policy’s macroeconomic adjustments.”

The government has set a budget deficit target at 3.0% of GDP for 2023, widening from a goal of around 2.8% last year.

On Monday, the finance ministry issued a preferential tax policy for some small firms and household businesses, including

levying a 20% income tax for small firms with annual sales not exceeding 1 million yuan ($145,808.73).

That tax policy will lower companies’ burdens by more than 480 billion yuan per year, Zhu said.

Chinese policymakers have pledged to step up support for the economy that is recovering steadily from one of worst showings in nearly half a century last year due to COVID-19 curbs.

($1 = 6.8583 renminbi)

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