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Senior Beijing government advisor says 'appropriately appreciating' yuan to help growth.
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A stronger yuan will help China meet its long-term growth target despite weighing on exporters, senior advisors of the central government said Wednesday, noting that the corporate tax and fee burden would continue to be reduced, although taxes for individuals may need to rise.
Liu Shijin, member of PBOC policy committee said China needed a growth rate of more than 4.7% per year over the next 15 years if the country meets the aim to reach its per capital GDP to a "middle-level advanced country" by 2035, which, he admitted, is a big challenge.
However, an appropriately appreciating currency will be helpful, he said, noting the labor productivity should improve accordingly, which is key to a high-quality development.
According to a Chinese Academy of Fiscal Sciences survey, costs for companies remain high, even after years of cutting taxes and fees, with survey participants noting the rising costs for labor, raw materials -- all added to the stronger yuan. The survey saw profits for most exporters higher by 6%-8%, meaning the yuan's over 5% gain in H2 2020 has eaten into profits.
Gao Peiyong, vice-president at Chinese Academy of Social Sciences, said the authorities will continue to support companies via tax and fee cuts over the next five years, but the precondition is increasing individual taxes, such as launching a property tax, and also reducing fiscal spending.