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Saturday, December 22, 2018, 09:56
Tax cuts will be stepped up
By Chen Jia and Xin Zhiming
Saturday, December 22, 2018, 09:56 By Chen Jia and Xin Zhiming

Chinese President Xi Jinping speaks during the annual Central Economic Work Conference in Beijing, capital of China. The conference was held in Beijing from Dec 19 to 21, 2018. (LI XUEREN / XINHUA)

China's annual tone-setting Central Economic Work Conference concluded on Friday, with participants agreeing to step up tax cuts and keep monetary and fiscal policies more accommodating to support growth, according to a statement published by Xinhua News Agency.

Policymakers at the meeting, which was presided over by President Xi Jinping, also agreed to continue to push all-around opening-up next year and protect the legitimate interests, especially intellectual property rights, of foreign enterprises.

China's annual tone-setting Central Economic Work Conference concluded on Friday, with participants agreeing to step up tax cuts and keep monetary and fiscal policies more accommodating to support growth

Analysts said the tax cuts and more proactive fiscal and monetary policies will help stabilize GDP growth of the world's second-largest economy next year.

The meeting said the authorities should implement reductions in taxes and fees on a "larger scale" and substantially increase the size of local government special bonds.

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The country's fiscal policy will remain proactive next year but should be stronger and more efficient, the conference said.

Bai Jingming, vice-president of the Chinese Academy of Fiscal Sciences, told China Daily that a more aggressive tax- and fee-cut plan will focus on both the corporate sector and households, which will improve business sentiment and increase individual incomes.

"The measures listed by the meeting will improve confidence of entrepreneurs, encouraging them to increase investment, as well as encourage consumption of individuals," he said. "The fiscal policy will be very significant in boosting domestic demand and stabilizing economic growth in the next year," Bai said.

As local governments are encouraged to issue more special bonds next year, financing for infrastructure construction will speed up, which will be a key measure in implementing the proactive fiscal policy, he added.

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Monetary policy should be "prudent" and strike an "appropriate" balance between tightening and loosening, according to Xinhua.

The term "neutral", which appeared in the wording of previous high-profile meetings describing monetary policy, was dropped from Friday's statement — a change that analysts said signals moderate loosening of the monetary policy stance.

The loosening would help maintain sufficient liquidity in the financial sector, which could keep corporate financing costs at a lower level, said Guan Tao, a researcher at the China Finance 40 Forum and a former senior official with the State Administration of Foreign Exchange.

Policymakers should keep liquidity reasonable and sufficient, improve monetary policy transmission, boost the ratio of direct financing and address funding difficulties for companies, according to the statement.

Guan told China Daily that the monetary policy will play a large role in offsetting economic slowdown risks as liquidity is kept at an appropriate and reasonable level.

To anchor growth, participants at Friday's conference vowed to support jobs, trade and investment and resolve financing difficulties for small and private companies, while curbing risks and financial market volatility, according to the statement.

China will also continue to pursue high-quality development, expand the domestic consumption market, boost rural development, promote balanced regional development, accelerate economic system reforms and improve people's livelihood, the meeting agreed. The country will also take measures to support growth of private enterprises and allow foreign companies to operate independently in more fields, the statement said.

Here is a list of key tasks on the top of the economic agenda:

-- Fiscal and monetary policy: China will continue to implement proactive fiscal policy as well as prudent monetary policy, make pre-emptive adjustments and fine-tune policies at proper time, and ensure stable aggregate demand.

-- More tax cuts: Proactive fiscal policy should be implemented with more effectiveness, with a larger scale of tax and fee cuts and a relatively substantial increase in the issuance of special-purpose local government bonds.

-- Fewer zombie companies: China will speed up the clean-up of "zombie" enterprises, while fostering new technologies and new industrial clusters.

-- High-quality manufacturing sector: Technological innovation will be strengthened, with the establishment of an open, coordinated and effective platform for the research and development of generic technology.

-- Stronger domestic market: China will accelerate the development of the service industry, including education, childcare, elderly care, medicare, culture and tourism while improving consumption and boosting spending power.

-- Rural vitalization strategy: To improve the living environment in rural areas, the country should promote garbage and sewage water treatment, carry out the toilet revolution and continue deepening rural land system reform.

-- Capital market reform: China will speed up the launch of a science and technology innovation board on the Shanghai Stock Exchange and experiment with a registration system.

-- Further opening-up: Market access should be loosened. Pre-establishment national treatment and the negative list management should be fully implemented to protect legitimate interests of foreign companies in China, especially intellectual property rights.

-- More exports and imports: The meeting called for greater efforts to increase imports and exports, push for a more diversified export market, and cut institutional costs of importing procedures.

-- Healthy property market: The meeting called for constructing a long-term mechanism to keep the sound development of the real estate market and adhering to the principle that "housing is for living in, not speculation."

(With Xinhua inputs)

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