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China to step up support for industrial and services sectors in special difficulty
Updated: February 16, 2022 07:17 Xinhua

BEIJING — China will boost the steady growth of the industrial economy and support the services sectors in special difficulty, according to a decision made at the State Council's Executive Meeting chaired by Premier Li Keqiang on Feb 14.

The meeting underscored the backbone role of industrial and services sectors in economic development and employment stability. As recovery of the industrial economy is not yet fully established and some service industries still face special difficulty caused by COVID-19, measures will be rolled out swiftly to provide stronger support.

"We are introducing the relief policies for industrial and services sectors in special difficulty first this year, as part of the effort to frontload policies as appropriate." Premier Li said.

More income tax relief will be extended to industrial and services sectors. This year, micro, small, and medium-sized enterprises (MSMEs) that purchase new equipment worth above 5 million yuan (about $786,000) and with a 3-year depreciation period are entitled to a one-off deduction of total purchase costs from taxable income, or a 50 percent deduction for such purchases of equipment with a depreciation period of four, five or ten years.

Tax deferral policies will be extended for MSMEs in the manufacturing sector. The coverage of the policy to reduce or waive six local taxes and two fees (namely, resource tax, urban maintenance and construction tax, real-estate tax, urban land use tax, stamp tax and tax of farmland used for non-agricultural purposes as well as education surcharge and local education surcharge) will be expanded to include all low-profit small businesses and self-employed households.

Guidance will be provided to strengthen financial services. The People's Bank of China will provide incentive funding to support increase of inclusive loans to micro and small businesses. Efforts will be made to facilitate a fairly rapid growth in medium and long-term loans to manufacturers. These will enable a steady fall in businesses' overall financing costs.

Industrial and supply chains in the manufacturing sector will be strengthened and weak links shored up, and rebuilding of industrial foundation will be taken forward. Efforts will be accelerated to develop new infrastructure and upgrade energy-saving and low-carbon technologies in key areas. These will boost effective investment.

To address the special difficulties facing catering, retails, tourism and passenger transportation, support will be scaled up including temporary tax breaks and partial deferral of social insurance contributions, with a view to promoting stable employment and consumption recovery.

Value-added tax will be exempted in 2022 for public transportation services such as bus, long-distance passenger transportation, ferry and taxi. The temporary refund of quality guarantee deposit for tourism services at the rate of 80 percent will stay effective.

For micro and small businesses and self-employed households in the services sector renting state-owned property, six months of their rentals will be waived for those in areas classified as high or medium-COVID-risk areas this year, and three months of such rentals will be waived for those in other areas.

Localities may provide assistance deemed proper to micro and small businesses and self-employed households renting non-state-owned property, and reduce or exempt property tax and urban land use tax this year for property owners who cut or waive rentals.

"Inflation is a prominent issue facing the world, and we must pay close attention to its potential spillovers. China's consumer price rises less than one percent. A very important reason is that in dealing with various challenges, we did not resort to a deluge of stimulus or excessive money supply, and we managed to stand firm. The macro leverage ratio was stable or down slightly last year," Premier Li said. "We are confident and capable of tackling inflation, but we must stay on alert. Bottlenecks in the services sector could also lead to sectoral inflation. As consumption remains subdued at present, it is important to take measures as quickly as possible, which is conducive to overall circulation of the national economy. It is no easy feat that we have not experienced inflationary pressures over the past years. Should inflation occur, it would cause a major impact on the society. Therefore it is crucial to ensure supply and keep prices stable."

The meeting stressed the importance of ensuring targeted and regular COVID response. Efforts to ensure the supply and stable prices of commodities will continue, to ease cost-induced pressures on downstream enterprises and keep consumer prices generally stable.

Food and energy security must be safeguarded. Efforts will be made to ensure a bumper harvest this year. Coal supply will be increased and coal-fired power plants will be supported in running at full capacity and generating more electricity, so as to meet the electricity needs for production and residential consumption. Policies to further help enterprises overcome difficulties will be prepared, in order to boost business vitality and the driving force for economic development.

"Amid the complex and challenging situation at home and abroad, we must attach great importance to tackling the constraints in economic activity and anchoring market expectations," Premier Li said.

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