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Chinese Officials Review Economic Strategies For Year Ahead

by Mary Swire, Tax-News.com, Hong Kong

04 December 2007


Chinese Officials met in Beijing earlier this week to discuss the country's economic strategies for the year ahead, according to a report from the Xinhua state news agency.

Key topics of discussion included China's Consumer Price Index (CPI), energy conservation and emission reduction, interest rates, and unified company income tax rates.

The country's CPI pushed up to 4.4% in the first ten months of the year, it emerged. Levels of 4.5% to 4.6% this year were predicted by the National Bureau of Statistics.

Where energy conservation and emission reduction were concerned, the official word was that all the efforts put in place so far seem to be paying off. This was shown by the fact that energy consumption per GDP unit fell by 3% in the first three quarters of the year, according to Xinhua.

China will now continue putting in place a package of measures in this area, which has so far included cutting down export rebates on high-polluting, and high-consumption products.

The recent increase in interest rates was also reportedly discussed by the officials. Benchmark interest rates were raised from September 16 by 27 basis points to 3.87% and 7.29% respectively for deposit and loan rates, "in a bid to curb rising inflation and tighten control over excessive liquidity", Xinhua reported.

It went on to explain that:

"The move did not end China's negative real interest rate, but it helped to offset the influence of high inflation on people's bank balances."

The final point which came under scrutiny was the country's unified company income tax rate. The conclusion was reportedly reached that "the new tax on foreign firms is still a moderate one compared with many other countries".

Under the terms of the enterprise income tax law adopted earlier this year, domestic and international companies are subject to the same rate of corporate income tax.


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