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00:00[CC may contain inaccuracies] Kathleen what exactly is in this package and what are authorities trying to do here. Well as they said they are trying to relieve downward pressure on the economy. And the centerpiece yes is this 21 billion dollars of tax relief to businesses. That's very important here because that's one of the things that's been a hallmark of the tax cuts is that fiscal steps that China has taken so far. Here's what we got. They've got 21 billion dollars in tax rebates to company. There's 60 billion yuan on passenger car purchase taxes. That equals about zero point one percent of China's GDP. But it's on top of course about one a half trillion dollars in tax cuts. They passed us so far this year. Another couple of things they're going to do there and double the quota on small and medium sized business loans so more people can get those. They're going to extend social insurance payments what we would call Social Security payments that amount of time that companies have to pay what they owe to the government. So all those are supposed to provide some relief. And if they said there they are trying to normalize their economy with targeted forceful effective steps this is the China's state council said this premier Li Keqiang of course is the person who runs that again. Most of this is going to businesses not households. Some people are saying maybe we should be sending some checks to consumers. A lot of other countries have done that so far. None of that is in the works. Now remember they made three or 93 billion dollars of tax cuts in March. And at the time Lee Chong likened tax cuts to quote fertilizer applied directly to the roots of the economy a very supply side approach. And like all supply side approach is the idea here which NIKKEI apparently supports is if you if you reduce the cost of businesses if you give them more money they'll invest it. They'll do something with that. That's going to boost the economy. Other people say well you might just end up increasing the debt. So far China has not said anything about they are going how they're going to fund this tax relief is certainly going to make their debt and deficit bigger. Maybe that comes for later. But it's interesting to see you know you've got a supply China sider in China. And as as the premier as the key economic adviser in the government's team this is what's holding sway for now. President Biden of course opening the door John Tucker U.S. tariffs on China. How wide is that opening. We have kind of heard overtures to this effect before. Well certainly they have been that the Biden team has been considering particularly since inflation picked up so much in the U.S. considering looking at reviewing tariffs et cetera. But when asked about tariffs. Let's listen to what Joe Biden said when he was on his trip to Asia today. I'm talking with the secretary we get home. I am considering it. We do not impose any of those tariffs that are imposed by the last administration and they're under consideration. And of course the secretary is going to talk to his treasury secretary Janet Yellen. She is the person who along with Biden and his team would figure out what to do next. And of course the thing about rolling back tariffs is it would be great for China potentially. The yuan had quite a jump when this news came out overnight in the U.S. late in the day yesterday in Asia. But as long as you have supply chains that are disrupted as long as you're locking down factories and factories and other manufacturing facilities any benefit that would accrue to trying to from this is seen as very limited. However the hotter inflation gets the more Biden and his team are being pressured if not looking for more and more ways to try to reduce inflation. Well if you remove tariffs the idea is you would reduce the cost of goods in the United States is buying from China. So it could provide some relief. On the other side of the political coin Heidi of course the November midterm elections are approaching and advisers to the president don't want him to look soft on China quote unquote at a time when the margin between Republicans and Democrats going into these midterms looks so slim.

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China Plans Tax Relief of Over $21 Billion to Lift Economy

China will offer more than 140 billion yuan ($21.1 billion) in tax relief to companies and consumers as the government seeks to offset the heavy impact of coronavirus lockdowns on its economy. Meanwhile, US President Joe Biden said he’ll review Trump-era tariffs imposed on imports from China. Kathleen Hays reports on "Bloomberg Daybreak: Australia." (Source: Bloomberg)

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