SwedCham China Insights for the Week of July 31 - August 4 , 2023

Top news of the week:

China issues 20 measures to restore and expand consumption

July 31, 2023

On July 31, the National Development and Reform Commission issued a notification on measures to restore and expand consumption. The measures propose 20 specific policy initiatives revolving around six aspects. These policies include stabilizing bulk consumption, expanding service consumption, promoting rural consumption, expanding new types of consumption, improving consumption facilities, and optimizing the consumption environment.

Steady operation of China's light industry in the first half of the year

August 1, 2023

In the first half of this year, the added value of China's light industry above the designated size increased by 0.4% year on year, maintaining growth for three consecutive months. Specifically, there was a 2.3% year-on-year increase in June.

PBOC guides commercial banks to adjust existing individual housing loan interest rates

August 2, 2023

The People's Bank of China stated it will implement city-specific and differentiated housing credit policies. The bank made clear its stance of favoring downward interest rates and down payment ratio for individual housing loans to better meet residents' rigid and improved housing demand. The central banks would also continue to guide commercial banks to adjust interest rates for existing personal housing loans in an orderly manner according to laws.

China looks to limit children to two hours a day on their phones

August 3, 2023

On August 2, the Cyberspace Administration of China (CAC) announced Guidelines for the Construction of a Minor Mode of Mobile Internet (Draft for Comments). The objective is to limit children's online time, suggesting that children under the age of 18 should spend no more than two hours using smartphones each day.

China's total service import and export volume increased by 8.5% year-on-year in H1 2023

August 4, 2023

In the first half of 2023, China's service trade maintained a growth momentum. The total volume of service import and export increased 8.5% year-on-year to RMB3.13584 trillion. Among them, exports amounted to RMB1.32322 trillion, a decrease of 5.9% YoY, while imports amounted to RMB1.81262 trillion, increasing by 22.1% YoY. The service trade deficit was RMB489.4 billion.

Insight of the week:

On August 2, the Ministry of Finance and the State Administration of Taxation jointly issued a series of announcements clarifying some tax policies to support the development of small and micro-sized enterprises and individual businesses. These policies aim to reduce the burden on enterprises, increase their vitality and promote entrepreneurship and employment.

China is currently confronting many uncertainties, and small and micro-sized enterprises and self-employed businesses are still facing many difficulties. To encourage the growth and advancement of the private sector, China needs to enhance its tax and fee reduction policies for these businesses. It is crucial to provide them with dedicated support to facilitate their progress. It will help boost business confidence, stabilise market expectations and continuously stimulate the vitality of business units.

The Chinese government will provide various tax and fee reductions, including but not limited to personal income tax, real estate tax, stamp duty and VAT, for sole proprietorships, small VAT taxpayers, small and low-profit enterprises, self-employed discharged soldiers and fresh graduates engaged in sole proprietorships.

Those policies will alleviate the tax burden on small and micro-sized enterprises and sole proprietorships, promote solutions to their financing difficulties and high financing costs, and support entrepreneurship and employment, especially for technology-oriented enterprises. These measures will bring tangible benefits to small, micro and individual enterprises and contribute to the stable development of the economy. It is expected that these measures can stimulate business development, increase employment opportunities and inject new vitality into China’s economy.