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Multiple measures to cut costs for real economy enterprises

Updated: Sep 1,2016 5:12 PM     english.gov.cn/Economic Daily

The State Council has issued a circular to reduce costs for real economy enterprises. Experts said that this is an important measure for supply-side structural reform.

Taxation is one of the major costs for enterprises. Experts said that China’s general tax burden still has much reduction potential.

Judging from economic costs, explicit cost and accounting cost are the two major fields the circular is targeting, said Li Zuojun, deputy director-general of the Research Institute of Resources and Environment Policies, Development Research Center of the State Council.

The main reason for enterprises’ high tax cost is that governmental functions have not been transformed completely. Reducing taxes can help enterprises cut explicit costs while administration streamlining and power delegation can help reduce their implicit costs, Li said.

Financing costs at small and micro-sized enterprises have been high for a long time. Regarding this problem, the circular listed six measures. Among them, two specific measures are very important, said Cao Yujin, a research fellow at the Economic Research Institute under the National Development and Reform Commission (NDRC).

One is to build up pilot areas for investment and loan linkage for enterprises targeting science and technology innovation or entrepreneurship, said Cao. The other is to finish the clearance of deposits in engineering and construction, he added.

The circular also asked to reduce the costs for land, energy and logistics to further promote reform in related fields. With the implementation of the circular, enterprises’ energy costs will be further reduced, said Zhang Yousheng, researcher at the Energy Research Institute under NDRC. Transmission and distribution prices, transaction costs and gas prices will all be reduced, said Zhang.

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