Sunday, June 26, 2022
Martin Hennecke

140b yuan tax relief rolled out
<p>China will offer more than 140 billion yuan (HK$165 billion) in additional tax relief mainly aimed at businesses as it seeks to offset the heavy impact of coronavirus lockdowns on its economy.</p><p>The measures include additional tax rebates to companies and cuts of 60 billion yuan on passenger car purchase taxes, China National Radio reported, citing a decision from a State Council meeting chaired by Premier Li Keqiang.</p><p>Beijing will also extend an existing delay on companies&#39; social-insurance contributions to the end of the year and expand the measure to more sectors, the report said, with that measure expected to save companies 360 billion yuan. The meeting also said that a quota for loans aimed at small and medium-sized enterprises would be doubled.</p><p>The policies are intended to &quot;stabilize&quot; the economy, the meeting declared. It also said that China will improve measures to help supply chains function, ensure domestic cargo transport runs smoothly and increase the number of domestic flights.</p><p>Meanwhile, slowing economic growth and anemic demand for loans have sparked heavy buying of low-risk short-term financial instruments by lenders, taking yields to near zero as banks seek to meet internal lending targets.</p><p>Strong demand for banker&#39;s acceptance bills - debt instruments guaranteed by banks - has pushed yields on one-month bills to an average of less than 1 percent and as low as 0.04 percent since the beginning of Shanghai&#39;s Covid lockdown in late March, according to data from the Shanghai Commercial Paper Exchange.</p>

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