China ‘two sessions’: help for coronavirus-hit small businesses likely to become more targeted, analysts say
- Small businesses in China generate most of the nation’s jobs, but they were the hardest hit by the economic impact from the coronavirus
- Last week, Premier Li Keqiang pledged to continue the broad business tax cuts enacted in the past two years while extending and adding other policies
China’s pledge to extend additional support to vulnerable small businesses will be more targeted, with the broad policies aimed at offsetting the economic impact of the coronavirus likely to be scaled back as conditions improve, analysts said.
It would be better to provide them a level field for competition and particularly reduce the implicit preferential treatment for state-owned enterprises
These targeted efforts will be joined by structural reforms over the next five years aimed at ensuring equal market access and fair competition for small private sector businesses with state-owned firms, analysts said.
“Generally, the proportion of the private economy [to the overall economy] hasn’t declined,” said Ding Shuang, Greater China economist at Standard Chartered Bank.
“It would be better to provide them a level field for competition and particularly reduce the implicit preferential treatment for state-owned enterprises.”
As part of the support to China’s legions of small-scale taxpayers, including caterers, street vendors, travel agents and transport firms, the value-added tax (VAT) threshold will be raised from 100,000 yuan (US$15,400) to 150,000 yuan of monthly sales.