China introduced new tax initiatives aimed at bolstering the nation's entrepreneurs, according to local news reports on Friday (May 4).
Vice finance minister Cheng Lihua introduced seven new tax policies during a press conference Friday, with the goal of saving small businesses $9.45 billion a year, reports from Xinhua said. The policies include tax cuts and introduce other incentives for SMBs to upgrade equipment, improve employee training, and enhance their research and development, the publication said.
According to Cheng, small businesses are vital for economic growth in China. He told reporters that the tax policies will aim to reduce burdens on small businesses, promote innovation, and strengthen financial standing among entrepreneurs.
Wang Zhaoxing, vice chairman of the China Banking Regulatory Commission, also reportedly spoke at the conference to highlight the benefits of previous regulations that prohibited banks from charging excessive fees on small business customers. Banks in the country cannot charge fees on small businesses other than loan interest, reports noted.
"Commercial banks have been asked to weigh more of their loans toward small and micro businesses," said Wang during the conference.
According to reports, official data shows outstanding small and micro business loans is now at $4.98 trillion, a massive increase from $16 billion at the end of 2017. Xinhua cited “official data” in its report.
China has taken steps to increase small businesses' access to bank financing for several years. At the same time, regulators are increasing oversight of lending activity, with the China Banking Regulatory Commission planning to impose greater punishments for regulatory violations on banks.
“Banking shareholder management, corporate governance and risk control mechanisms are still relatively weak, and root causes creating market chaos have not fundamentally changed,” the CBRC said, according to Reuters reports in January. “Bringing the banking sector under control will be long-term, arduous and complex.”