Beijing to accelerate tax cuts and boost spending as growth falters

China will pursue a more active fiscal policy to bolster economic growth during a time of growing internal and external challenges, according to the State Council.

Following a meeting on Monday, the Council resolved to focus on tax reduction and heightened infrastructure spending funded by the issuance of government bonds, reports Caixin. China’s current quota for special bond issuance stands at Rmb 1.35 trillion ($200 billion), up 69% from Rmb 800 billion last year.

The meeting rejected the option of a large stimulus package but promised that businesses will have Rmb 1.165 trillion more this year after tax cuts. The proposed tax cuts will make good on commitments made previously to alleviate the fiscal burden on China’s corporations by Rmb 1.1 trillion made earlier this year.

The move comes a week after a public debate was triggered by an article written by a senior researcher at China’s central bank, in which the government’s fiscal policy was criticised for not being proactive enough at a time when both monetary and fiscal methods must be leveraged.