China accelerates implementation of fiscal, tax policies to stabilize growth

China has accelerated the implementation of a slew of fiscal and tax policies to shore up economic growth, a senior official said on Tuesday.

To spur the vitality of market entities, the country has ramped up efforts to carry out new combined supporting policies through tax and fee cuts, Vice Minister of Finance Xu Hongcai told a press conference.

The issuance of value-added tax (VAT) credit refunds to micro and small enterprises has been in place since April. Meanwhile, work towards refunding outstanding VAT credits to medium-sized and large companies will start ahead of schedule, Xu said.

To date, the country has reduced tax burdens and increased cash flows for enterprises by more than 1.6 trillion yuan (about 235.8 billion U.S. dollars) this year. A total of 1.2 trillion yuan of special transfer payments from the central government has been arranged to help reduce tax and fees and ensure people's livelihoods, with 800 billion yuan already allocated.

Xu said China has also promoted the issuance and utilization of special-purpose local government bonds to expand effective investment.

By May 15, local governments had issued 1.5 trillion yuan of special-purpose bonds, up 1.3 trillion yuan from the same period a year ago. Released special-purpose bonds had provided financial support for more than 11,000 projects by the end of April.

Supportive measures for enterprises have been unveiled to help them tide over difficulties, the vice minister said.

Preferential tax policies have been given to sectors heavily hit by COVID-19 such as logistics and catering. Local governments are also encouraged to provide subsidies for enterprises and self-employed households struggling with rent, utility bills and COVID-19 prevention fees.

With regard to fiscal revenue declines in some regions in April, Xu attributed the declines mainly to the implementation of large scale VAT credit refunds.

China rolled out new combined supporting policies through tax and fee cuts this year, which helped enterprises reduce financial burdens but lowers fiscal revenue, Xu said.

Going forward, Xu said the ministry will promptly design additional policy tools and strengthen policy adjustment to stabilize the economy and ensure the achievement of full-year economic and social development goals.