Published Date : Sep 09, 2015
China will be adopting a much stronger fiscal policy framework in order to support its growth, Beijing reportedly said as it works to calm growing fears surrounding the second largest economy in the world after the financial turmoil in overseas as well as domestic markets.
The Chinese government will step up major construction projects, encourage investments in key areas from private capital, and enable more small enterprises to make the most of tax cuts, according to the finance ministry.
Global markets have been in utter turmoil over the past several weeks on concerns of a growth slump in China, which is a major driver of global expansion. This is turn has wiped off over trillions from share prices. The fear has also impacted markets in mainland China after the exchange rate in Shanghai dropped following a debt riddled bubble burst.
Even though no specific future spending values were revealed by the finance ministry, it said that the central government, by the end of last month, has already spent a whopping 96 per cent of its investments of a yearly infrastructure budget.
In order to achieve China’s growth target of approximately 7 per cent for this year, the finance ministry will have to pull up its socks and accelerate reforms in order to stabilize growth, fine tune different measures on a regular basis, and improve the fiscal policy to make it more proactive.
The Shanghai stock market, in share trading on Wednesday, went up by 2.29 per cent, continuing its nearly 3 per cent rally on Tuesday with the hopes that government measures will steady the economy. In both the first two quarters of 2015, economic expansion was recorded to be 7.0 per cent. However, the Chinese government on Monday reduced its growth reading of 2014 to 7.3 per cent after January’s announcement of 7.4 per cent.