05/07/2015, 00.00
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Beijing removes "unnecessary taxes" for emerging industries

The government wants to support the service sector, particularly e-commerce start-ups. For this reason, it is planning a preferential tax policy for small businesses with great potential. China needs to diversify: industrial production is causing too much damage.

Beijing (AsiaNews) – The Chinese government is planning to eliminate "unnecessary tax hurdles" to support emerging industries, particularly e-commerce start-ups, the State Administration of Taxation announced. This corresponds to the path laid down by Prime Minister Li Keqiang in his closing speech at the last National People's Congress.

The prime minister, who is traditionally in charge of economic affairs, said on 15 March 2015 that growth had stopped, that the country could expect difficulties meeting its growth target but that it would press ahead with "painful reforms".

Li also stressed the importance of innovation and e-commerce as new engines of growth, but otherwise offered few details on how the China's economy would go forward, except to use metaphoric language.

"We need to position ourselves to where the winds blow," he had said. "If we catch this wind of the internet, the Chinese economy will fly".

In its own statement, the State Administration of Taxation noted that "We need to actively support healthy development in new industrial patterns and new business models". In view of this, the government would make great efforts to bolster society-wide innovation, it added.

Such “steps are aimed at ensuring tax policies aren't overly harsh for small firms as they are particularly important to the country's job stability, innovation and economic development," said Li Hongxia, a professor of finance and taxation at the Capital University of Economics and Business.

A new form of economic development is thus necessary for China, whose model so far focused on high volume, low quality industrial output.

The global economic crisis, the emergence of new and competitive industries, civil society unrest against the exploitation of workers, and pollution – now a national evil – are forcing Beijing to rethink its growth strategy.

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