China’s Li vows support measures from rail projects to tax breaks

Chinese Premier Li Keqiang said the nation will speed railway construction, especially in central and western regions, adding support for an economy that’s set to expand at the slowest pace in 23 years.

The State Council also Wednesday approved tax breaks for small companies and reduced fees for exporters, according to a statement after a meeting led by Li. China plans a railway development fund, the government said.

Additional spending would help the world’s second-largest economy, after the government signaled this week it will protect its 7.5 percent growth target for this year following a second straight quarterly slowdown. Economists surveyed by Bloomberg News cut expansion forecasts this month, reaching a new median estimate of 7.5 percent, which would be the lowest since 1990.

“Premier Li’s team has been surely working around the clock” to arrest the slowdown, said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “It’s a small stimulus” that may boost confidence while having a limited effect in boosting demand, Lu said by email Thursday.

Resolutions passed at Wednesday’s cabinet meeting included the exemption of companies with monthly sales of less than 20,000 yuan from value-added and business taxes starting Aug. 1, according to the statement. The move will benefit more than 6 million small businesses and affect jobs and income of tens of millions of people, the government said. (

China will also reduce administrative fees on export inspections and encourage financing and tax-rebate services for small firms to promote trade, according to Wednesday’s statement, and will seek a balance of international payments that ensures stability of the yuan exchange rate.

The government also plans to grant ownership and operating rights on some city and regional railways to local government and private investors.

“To get rich, you must build roads first, especially railroads,” Li was cited by the official Xinhua News Agency as saying at the meeting. Accelerating railway construction brings “multiple benefits” by promoting urbanization, stabilizing growth and improving people’s lives, Li said. (Bloomberg)