Stronger tax breaks, less fees needed to stimulate economy: Economist

Tsinghua University professor Bai Chongen at a forum in Beijing, Oct 17, 2012. [Photo/VCG]

BEIJING - A Chinese economist has suggested more tax cuts and less administrative fees for businesses to stimulate the economy.

"The government should cut taxes and lower fees more vigorously to bring down corporate burdens and increase profit margins," Tsinghua University professor Bai Chongen said Wednesday at the annual meeting of Chinese Economists 50 Forum (CE50).

Bai said businesses would then be encouraged to invest more and improve productivity, relieving some downward pressure on the economy.

Policymakers have pledged fiscal support to stabilize growth and maintain a proactive fiscal policy this year. While some analysts are inclined to pay more attention to huge spending on infrastructure, Bai believes it is tax breaks and other such policies that can truly revitalize the economy.

Government-driven investment has resulted in falling business profits and efficiency for nearly a decade, since global financial crisis prompted the Chinese government to spend big to fend off risks, according to Bai.

Bai advised the government to earmark more funds for social security as firms are suffering from making high social security payments for their employees.

China's economy expanded 6.7 percent in 2016, a slowdown from the 6.9 percent growth registered in 2015 but within the government's target range, and more indicators for January have shown the economy is gaining a firm footing at the start of 2017.

Founded nearly two decades ago, CE50 is a civil academic organization and think tank that brings together around 50 prominent Chinese economists, including officials and academics.