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China unveils fresh measures to boost growth | China unveils fresh measures to boost growth |
(about 1 hour later) | |
China has unveiled a series of moves aimed at boosting growth, indicating that policymakers are concerned about the slowdown in its economy. | China has unveiled a series of moves aimed at boosting growth, indicating that policymakers are concerned about the slowdown in its economy. |
The steps include tax breaks for small businesses, reduced fees for exporters and opening up of railway construction. | The steps include tax breaks for small businesses, reduced fees for exporters and opening up of railway construction. |
China's economic growth rate has slowed for two quarters in a row and there are concerns that it may slow further. | China's economic growth rate has slowed for two quarters in a row and there are concerns that it may slow further. |
But the cabinet said the economy is in a reasonable shape and it was pushing for reforms to stabilise growth. | But the cabinet said the economy is in a reasonable shape and it was pushing for reforms to stabilise growth. |
"The economy is still running in a reasonable range," the cabinet said. | "The economy is still running in a reasonable range," the cabinet said. |
"We must look at now and beyond to let restructuring and reform play an active role in stabilizing growth." | "We must look at now and beyond to let restructuring and reform play an active role in stabilizing growth." |
'An olive branch' | |
Data released earlier this month showed that China's economic growth slowed in the April to June period. | Data released earlier this month showed that China's economic growth slowed in the April to June period. |
The world's second biggest economy grew by 7.5% compared to the previous year, down from 7.7% in the January to March period. | The world's second biggest economy grew by 7.5% compared to the previous year, down from 7.7% in the January to March period. |
Its growth has been hurt by a slowing demand for Chinese exports from key markets such as the US and Europe. | |
On Wednesday, an initial survey done by HSBC indicated that factory activity in China continues to contract, falling to a 11-month low in July. | |
At the same time, policymakers have found it tough to boost domestic consumption enough to offset the decline in foreign sales - triggering fears or a further slowdown in China's economy. | |
Prompted by the slowdown, China's policymakers have announced fresh moves to boost growth. | |
Beijing said it will suspend the value-added tax (VAT) and turnover tax for small businesses with monthly sales of less than 20,000 yuan ($3,257; £2,125), starting from 1 August. | |
The cabinet said the move will benefit more than six million small companies and boost the employment and income for millions of people. | |
Policymakers said they will also implement measures to simplify customs clearance procedures, cut operational fees and facilitate the exports of small and medium-sized private enterprises. | |
Analysts said that the moves were aimed cushioning the impact if slowing growth on small businesses. | |
"It does look like an olive branch that the government has extended to smaller businesses amid the recent slowdown in growth," Vishnu Varathan, an economist with Mizuho Bank told the BBC. | |
"While they have not announced a massive stimulus boost or gone on a credit binge as in the past - they are keeping a look-out for those that may be affected the most by slowing economic growth." | |
Railway reform | |
The cabinet added that it would also completely open China's railway construction market to ensure that the country can develop the sector further. | |
It said that the government will set up a railway development fund with the initial money coming from the government. | |
However, it will encourage private players to invest in the sector. | |
The state-owned Xinhua news agency reported that private players "will have ownership and management rights for inter-city railway links and municipal rail links". | |
The government said it will also issues new bonds to help fund railway construction. | |
"We must speed up preparation work to ensure a timely start to key projects in the 12th five-year plan, and push them ahead at a reasonable pace, while ensuring quality," the cabinet said. |