Tax reform 'big step' in nation's transformation of its economy

SHANGHAI - Vice-Premier Li Keqiang highlighted "innovation" while calling for a faster economic restructuring and industrial upgrading, along with new efforts to raise living standards, during an inspection tour in Shanghai on Thursday and Friday.

Li said innovation, the lifeblood of an enterprise, was also an important engine to expand domestic demand, upgrade industries and transform the mode of economic growth.

Enterprises should adopt innovative thinking about their technology, products, management and related aspects of their business to increase supply and foster the growth of the market, he said.

Li visited a shipyard under Jiangnan Shipyard (Group) Co in Changxing Island. He encouraged the company to carefully monitor changing market demand and to make high-quality ships based on innovation.

Li also visited CBI China, a Shanghai-based commodity information agency. He said more effort should be made to develop the service sector, especially the modern service industries.

To promote the development of a modern service industry, a pilot program of value-added tax reform has been initiated in Shanghai.

Li said that reform "was a big step in China's economic transition and structural adjustment, as well as a major part of the structural tax reduction".

Professor Xiao Lin, dean of the Shanghai Academy of Development and Reform, said that "innovation" was the key to Shanghai's economic development.

"The State Council has unveiled plans to build Shanghai into a global financial center and shipping hub by 2020.

"This ambitious target requires Shanghai to improve its infrastructure and economic environment, in which the convertibility of the yuan and the free flow of currencies in and out of the country are crucial," he said.

"In that case, trials may be conducted in sectors including finance, shipping and trade in Shanghai," he said.

Feng Guoqin, chairman of the Shanghai Committee of the Chinese People's Political Consultative Conference, said at a seminar earlier this month that innovation would support and guide the city's development, which has a very important role in the city's "soft power".

During his time in Shanghai, the vice-premier also visited local affordable housing projects and community health service centers, calling for local governments to ensure the quality and distribution of affordable homes.

He also called for further development of the country's basic medical insurance system.

Shanghai has begun to phase in a new endowment insurance-type benefit for local residents. The new system will collect premiums out of pre-tax income, making it cheaper for individuals.

Xinhua News Agency contributed to this story.