China will step up fiscal spending this year to support its economy, focusing on further cuts in taxes and fees for small firms, finance ministry officials said on Wednesday, Trend reports referring to Reuters.
Mounting pressure on the world’s second-biggest economy pushed growth last year to its lowest since 1990 even as Beijing stepped up stimulus measures and spurred banks to lend more.
The government may unveil more fiscal stimulus during the annual parliamentary meeting in March, including bigger tax cuts and more spending on infrastructure projects, economists say.
China’s fiscal spending rose 8.7 percent to 22.1 trillion yuan ($3.3 trillion) in 2018, while revenue increased 6.2 percent to 18.3 trillion yuan, said Li Dawei, an official at the finance ministry.
China achieved its 2018 fiscal revenue target despite extensive tax cuts last year, Li added.
Beijing delivered about 1.3 trillion yuan of cuts in taxes and fees in 2018.
Finance Minister Liu Kun said this month that China will further lower taxes and fees this year. The government is also studying a plan to reduce social security fees to lighten the burden on small companies, Liu said.
Policy insiders also expect Beijing to cut the value-added tax, which ranges from 6 percent for the services sector to 16 percent for manufacturers.
Policymakers’ pledge of more aggressive tax reductions in 2019 has fanned expectations that the annual budget deficit ratio could be lifted to 3 percent of gross domestic product.
The government had lowered the 2018 deficit target to 2.6 percent of GDP from 3 percent the previous year - the first cut since 2012.
The finance officials, speaking to reporters on Wednesday, did not report the size of the 2018 budget deficit.
China will “appropriately” step up fiscal spending in 2019, said ministry official Hao Lei.
Fiscal revenue growth is expected to slow this year, Li said.
Earlier, sources told Reuters the deficit target could rise from 2.6 percent of GDP but is likely to be kept below 3 percent.