Beijing, 23 February 2022 (TDI): China has recently decided to launch bigger tax cuts in 2022, amidst US sanctions that have cut China off from suppliers of key technologies.
The tax cut also aims to support small businesses and the greater transfer of payments from the central government to local governments. Chinese Finance Minister, Liu Kun was joined by Vice Finance Ministers; Yu Weiping and Xu Hongcai at a news conference where the press was briefed about the policy measures.
China’s economic growth slowed down considerably after a robust rebound in 2021. Fiscal and monetary policies are expected to follow to curtail this. Specifically, tax cuts.
Tax cuts in 2022 will be greater than in 2021 (which amounted to 1.1 trillion yuan) These cuts will not only benefit the technology sector but will support environmental protection, agriculture, and finance.
Small and medium-sized enterprises (SMEs) will benefit the most from tax cuts. The government has also allocated an additional 3 billion yuan in subsidies to support SMEs.
China’s Minister of Finance, Liu Kun said that local governments will continue to provide special bonds, last month bonds worth 484.4 billion yuan were issued for use in areas like subsidized housing, industrial parks, and transport.
Liu Kun also addressed the notion of technological self-reliance as the US imposed technological sanctions on the county which prevents the import of several key technologies. In 2021, expenditure on science and technology rose by 7.2% the funding helped the country develop chips and energy vehicles.
The country also introduced policies to support China-made technology. The central government is planning to increase spending on research and development by greater than 7% between 2021 and 2025.
Yu Weiping, Vice President of the Ministry of Finance said that the government had increased spending on research in 2021, additionally, businesses in China received 1.3 trillion yuan in deductions for research and development purposes.
“The Ministry of Finance sticks to the priority of ensuring the national development strategy of scientific and technological self-reliance and self-improvement.” -Yu Weiping. China’s fiscal revenue grew by 10.7% between 2020 and 2021.
