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State Council executive meeting on April 1

Updated: Apr 1,2015 8:34 PM Daily

Premier Li Keqiang presided over the executive meeting of the State Council on April 1.

The State Council decided to improve the efficiency of financial funds by tapping into capital that is not being fully utilized.

The activated money will be used to develop key sectors that urgently require funding and to close loopholes.

Plans will be drafted to outline to-do lists and timetables to pool and activate unutilized money, the State Council said.

The State Council asked all departments to sideling the central and western regions in capital utilization, boost effective investment and increase the supply of public goods and services to financially disadvantaged rural areas.

There will also be appropriate cuts to the coming year’s total budget for departments with a lot unutilized capital. Governmental funds, income of state-owned capital as well as the special funds for departments will be cleaned up and integrated.

A fiscal and taxation system that regulates the duties and disposable funds of departments will be established, to improve the efficiency of fiscal management and support economic development.

The State Council decided to expand the legitimate investment areas for the country’s social security fund, which totaled over 1.5 trillion yuan in assets by the end of 2014.

China decided to allow up to 300 billion yuan ($47.97 billion) in the nation’s social security fund to be used to invest in local government bonds and other financial instruments this year, more than double of 2014.

It was the first time for China to allow its social security fund to be used to invest in local government bonds.

In addition, the social security fund’s maximum ratio permitted for investment was raised from 10 percent to 20 percent of its total assets.

Local governments’ debt stood at 17.9 trillion yuan as of June 2013, according to data from the National Audit Office.

The fund will also be encouraged to make equity investment in leading local corporations, including private companies, in a bid to enhance the return rate of the capital to fill in a huge shortage of the fund.

More capital will be used to support projects like affordable houses and the construction of urban infrastructure. The fund will also be allowed to invest in inter-bank deposit.

A statement released after the meeting described social security fund as an important source to ensure people’s living, saying that money should be invested in a wide range of financial products to reduce risks and increase revenue.

China’s social security fund profited 139 billion yuan from investment in 2014, with an 11.4 percent return on investment, according to the National Council for Social Security Fund, thanks to the surge in share prices at the end of the year. The rate of return in 2014 outperformed that in 2013 of 6.2 percent.

In a bid to step up e-commerce and related industries, the State Council meeting also agreed to cut tax for online shop owners by replacing the business tax with value-added tax and encourage venture capital fund to invest in start-up e-commerce companies.

Calling e-commerce an integration of traditional manufacturing and Internet-based business, the meeting recognizes the sector as an important regard in the country’s strategy of Internet Plus initiative - a plan proposed by the Premier to upgrade traditional industries with Internet advantages.