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22 May 2024

China’s Xi promises tax cuts, other help to entrepreneurs

Photo: AP


President Xi Jinping has promised tax cuts and other help to China’s entrepreneurs in a renewed effort to revive growth in a cooling, state-dominated economy amid a mounting tariff battle with Washington.

Xi’s comments, reported Friday by state media, follow a decline in Chinese economic growth to a post-global crisis low of 6.5 percent over a year ago in the three months ending in September.

The fight with U.S. President Donald Trump has added to pressure on communist leaders to rev up economic activity that has weakened since Beijing clamped down on bank lending last year to rein in surging debt.

The comments appeared to be aimed at shoring up confidence among entrepreneurs who generate China’s new jobs and wealth amid complaints Beijing is dragging its feet on economic reforms and reining in the dominance of state industry.

The economic slowdown, coupled with Beijing’s dispute with Trump, has fed gloom among investors. China’s stock market has tumbled 30 percent since January.

The ruling party needs to nurture conditions to “let the private economy create vitality,” said Xi in a speech Thursday to a group of entrepreneurs, according to the official Xinhua News Agency.

Communist leaders promised for the first time in 2013 to give market forces the “decisive role” in allocating resources, but reform advocates say they have focused on building up state industry while doing little for entrepreneurs.

Xi’s comments repeated previous party promises but the decision to affirm them in such a prominent setting appeared to be aimed at assuring entrepreneurs of official support and dispel any uncertainty.

“Private enterprises and private entrepreneurs are our own people,” the president said, according to Xinhua.

Xi promised to “reduce the burden of corporate taxes and fees,” give tax exemptions to small and high-tech enterprises, improve access to financing and “create a level playing field” in markets dominated by government industry.

The president’s comments reflect the party’s commitment to improved conditions for entrepreneurs is “vitally important,” said economist Lu Zhengwei of Industrial Bank.

Xi also made clear the party’s willingness to help clear up problems such as financing for entrepreneurs, said Lu.

“It is now clear what adjustments we should make and what we should adhere to,” Lu said.