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31 July


China's tax cut is not enough for small businesses

Li Keqiang announced the VAT from April 1

Photo: EPA

/NOVOSTIVL/ After much consideration, Guangdong garment factory owner Steve Liu reluctantly decided to turn down an order from an overseas client for two million pairs of trousers even after China’s decision to cut taxes to help businesses, highlighting the "cruel world" of small and medium-sized manufacturing. This article appeared in the South China Morning Post.

The order of cropped pants would have, in the end, resulted in a loss for Liu as the offer of US$4 (26.86 yuan) per pair was below the 29.3 yuan production cost before tax.

"Those boasting that these policy tax cuts are unprecedented and sufficient, I bet they have never been a boss of a small factory like ours," he said.

Brokerages and government think tanks have hailed the government’s plan to cut the value-added tax (VAT) rate for manufacturing firms by 3 percentage points to 13 per cent from April 1, saying it would boost domestic business and aid employment to help offset the slowdown in growth caused by the US-China trade war.