LONDON, March 12, 2019 /PRNewswire/ -- The second session of the 13th National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference (CPPCC) opened in Beijing on 5 March 2019.
CRU's Economics team has written an Insight on what occurred and what it means for the macroeconomy - National People's Congress 2019: The year of lower growth and modest stimulus.
As the Economics Insight discusses manufacturing sector VAT rates reduced from 16% in 2018 to 13% in 2019. And transport and construction sector VAT rates are reduced from 10% in 2018 to 9% in 2018. As the Economics Insight also discusses the government has also pledged to step up efforts to support small enterprises. The support measures include a cut in the required reserve ratio (RRR) for small enterprises. as well as a 30% growth target of loans to small enterprises by the large national banks.
This follows on from VAT cuts that occurred in 2018. In May 2018, the VAT rate was lowered from 17% to 16% for manufacturing and some other industries, and from 11% to 10% for transportation, construction, basic telecommunication services and farm produce. Currently, China's VAT has three categories – 16% (covering most manufacturing sectors), 10% (basic goods and services), and 6% (higher value-added services, like finance industry).
China's plan to further tax reduction this year has been generally welcomed by commodity markets including aluminium, as the manufacturers have the potential to improve their profitability by paying less for their raw material, or for other inputs into their production process.
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