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People's Daily Online>>China Business

China will not suffer a hard landing in 2012

By Song Guangmao (People's Daily)

09:33, February 22, 2012

Edited and translated by People's Daily Online

Certain international institutions recently made a cautious prediction that there will be a sharp slowdown in the Chinese economy. They should be confident about China’s economic growth this year, as the country’s economy is highly likely to maintain stable and rapid growth, instead of suffering a hard landing.

China will implement more proactive fiscal policy this year. The pro-activeness of the country’s fiscal policy last year was mainly manifested in the 900-billion-yuan bonds issued by the Ministry of Finance.

In addition to maintaining some proactive measures introduced last year, the country will pay more attention to structural tax reduction this year. It is estimated that the pilot program of replacing business tax with value-added tax has reduced the tax burden on Shanghai-based businesses by over 10 billion yuan.

The increase in the personal income tax threshold is likely to cut the tax burden on wage earners by 160 billion yuan this year. The rise in the thresholds for value-added and business taxes can generate tax reductions of 29 billion yuan a year, and the removal of the value-added tax on vegetables can generate tax reductions of 15 billion yuan a year. China’s fiscal revenue exceeded 10 trillion yuan last year, enabling the government to continue the structural tax reduction plan this year.

China’s prudent monetary policy is being fine-tuned to stimulate economic growth. The country’s central bank lowered the reserve requirements ratio for commercial banks by 0.5 percentage point on Dec. 5, 2011 after raising it for several times, and recently announced that it would lower the reserve requirements by 0.5 percentage point again. There are signs that the central bank may lower the reserve requirements a few times again this year.

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