China announced new steps aimed at bolstering slowing economic growth by cutting taxes, spending more on developing the Yangtze River region and expanding financing for exporters.
China will boost public investment in railway, highway, waterways, and aviation-network construction in the Yangtze River basin and cut some utility companies’ taxes by a total of about 24 billion yuan ($3.9 billion) a year, the State Council said in a statement after a meeting yesterday at which Premier Li Keqiang presided.
The People’s Bank of China said in a separate statement yesterday that it will encourage banks to lend more to exporters to boost shipments. It reiterated plans to promote development of direct trading between the yuan and other currencies.
The initiatives came after falling imports last month underlined the weakness in domestic demand that is making the Chinese economy more reliant on exports. Policy makers are seeking to create jobs and industries to replace real estate and manufacturing for export.
Imports fell 1.6 percent in May, the customs agency said last week. The drop wasn’t foreseen by any of the 42 economists in a Bloomberg survey, which had a median projection for a 6 percent gain. Exports gained 7 percent against an estimated 6.7 percent.
China’s gross domestic product rose 7.4 percent in the first quarter from a year earlier, the slowest pace since 2012 and down from 7.7 percent in the previous three months. GDP is forecast by analysts to grow 7.3 percent this year, which would be the least since 1990.
In yesterday’s statement, the cabinet said development of the Yangtze River region will stimulate growth in an area with a fifth of China’s landmass and 600 million people.
Starting July 1, utilities companies including water-treatment plants and small hydroelectric facilities will be subject to 3 percent value-added tax, down from a previous range of 3 percent to 6 percent, according to the statement.
The cabinet also approved a long-term plan for the logistics industry yesterday, seeking to cut transportation costs and improve efficiency, promoting easier flow of goods among regions, it said.