China took a meaningful step to stabilize the economy on Wednesday when it announced that, from Aug 1, value-added tax and the tax on turnover will be scrapped for small businesses whose revenues are less than 20,000 yuan ($3,200) a month.

This should greatly boost the morale of small businesses, which are one of the biggest sources of jobs in the country. In all, 6 million small businesses are expected to benefit.

The announcement was made in a statement released on Wednesday after an executive meeting of the State Council presided over by Premier Li Keqiang.