MNI China Press Digest Dec 28: Consumption, Tax, Industry

Highlights from Chinese press reports on Thursday:

• Authorities should comprehensively examine excess and inefficient investments totalling over CNY20 trillion every year, and reallocate these fiscal funds to increase resident income, improve social security and subsidise consumer spending to help achieve over 5% economic growth in 2024, said Teng Tai, president at Wanbo New Economic Research Institute. The current multiplier effect of each unit of fiscal spending on investment is less than one, but the effect is greater than three if it is used to issue consumer coupons, said Teng. It requires reforms of the government's decision-making and execution mechanisms to achieve the shift from an investment-driven to a consumption-driven economy, Teng added. (Source: Yicai)
• China should improve the local tax system to boost local government income as the old model of heavy reliance on land-sale revenue and transfer payments from higher-level governments is unsustainable, 21st Century Business Herald reported citing analysts. It is high time to promote reform of consumption tax, including giving local governments more tax collection authority and adjusting the scope of taxable items and tax rates, said Sun Kunpeng, associate professor at Central University of Finance and Economics. The Central Economic Work Conference in December indicated a new round of fiscal and taxation reform will begin soon.
• Authorities should focus on the increase in industrial enterprises' corporate accounts receivable and overdue debts caused by insufficient demand, and implement supporting policies to consolidate the rebound in industrial profits, 21st Century Business Herald reported citing analysts. China's industrial profits rose by 29.5% y/y in November, on top of a 2.7% increase in October, achieving positive growth for four consecutive months. It is necessary to support financial institutions to develop intangible asset pledge financing services by accepting intellectual property rights, trademark rights, orders, and scientific and technological achievements, as well as increase medium- and long-term loans and subsidised loans for manufacturers, said Guan Bing, head of industrial economics of CCID Research Institute.