The Chinese government is considering tax incentives for certain manufacturers in China to stimulate the economy. With this, the country wants to focus on the innovation of technology to compete with the United States. Insiders report this to the Bloomberg news agency.
The new tax policy could save some manufacturers hundreds of billions of yuan, one of the sources said. For comparison, 100 yuan is equivalent to about 13 euros. However, the plans are not yet finalized and must also be approved. Nevertheless, analysts already predicted that China would opt for such measures to boost business confidence.
President Xi Jinping earlier this month listed a “modern industrial system” as one of China’s top economic priorities. Support for the most advanced manufacturing companies in the country was also discussed in May. These span various industries, such as those for raw materials, chips, artificial intelligence (AI) and biopharmacy.
The Chinese economy is losing momentum after a revival shortly after the corona crisis. The latest data shows that exports and investment are declining across the board. Youth unemployment is also on its way to a record high. As a result, Chinese stocks have also plummeted, as have prices for essential commodities such as copper and iron ore.
The government had already announced tax breaks worth 1.8 trillion yuan for this year. That this amount may be increased further may indicate that Chinese government officials are concerned about the outlook for the economy. Last year, Beijing allocated a record amount of 4.2 trillion yuan to stimulate the economy.
