Aid for small biz seen spurring recovery

China's recent moves to ease financial burdens faced by micro and small businesses and households are expected to further spur both economic rebound and consumption recovery this year, officials and experts said.

In the past week, officials have reiterated various policy measures that were effected to help small businesses.

On Monday, the Ministry of Finance announced on its website that China's small businesses with monthly sales of no more than 100,000 yuan ($14,764) each are exempted from value-added tax this year. This is expected to ease the burden on firms amid renewed efforts to bolster growth.

For certain small businesses, two VAT rates, currently levied at 3 percent, will be lowered to 1 percent.

Last year till Nov 10, China had cut or deferred taxes and administrative fees by more than 3.7 trillion yuan, according to data released by the State Taxation Administration.

Facilitating the recovery of smaller businesses has been an integral part of China's policy mix to boost overall economic recovery this year. On Saturday, Guo Shuqing, Party secretary of the People's Bank of China, the country's central bank, said in an interview with China Central Television that the country will widen financing channels for private firms, supporting their stock and bond issuances.

Prudent monetary policy will be precise and forceful, with a focus on expanding effective demand and deepening the supply-side structural reforms, Guo said.

Financial policies will work in sync with fiscal and social policies to increase incomes of low- and middle-income groups as well as those hit hard by COVID-19, said Guo, who is also the chairman of the China Banking and Insurance Regulatory Commission.

Some experts said they believe these moves are crucial for this year's growth and will provide prompt support to businesses now staging a recovery, while also boosting household consumption.

Qu Hongbin, chief economist for China at HSBC, said in a recent interview that this year, greater financial support shall be channeled to micro, small and medium-sized enterprises that have been hit the hardest by the COVID-19 aftermath.

"With more and better targeted fiscal and financial support leaning specifically toward them, this is expected to facilitate a faster and stronger recovery of the Chinese economy," he said.

He also said that most of the country's fiscal resources were channeled toward large-scale infrastructure projects in the past. Yet, relatively limited resources currently available shall be directed toward smaller businesses and low-income groups on a priority basis.