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China’s premier says tax cuts support employment, stability

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China's Premier Li Keqiang attends a meeting with Ecuadorean President Lenin Moreno at the Great Hall of the People in Beijing, China December 13, 2018. REUTERS

SHANGHAI (Reuters) – China’s plans for tax cuts targeting smaller companies will help to support employment and economic stability, and will expand the country’s tax base over the long term, Premier Li Keqiang was quoted as saying on Saturday.

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“Implementing tax cuts for small and micro enterprises is mainly to support employment,” Mr Li said in comments posted on the Chinese government’s website.

Developing and strengthening small companies is linked to economic stability and stable employment, he said.

“Looking at the long term, this will continue to expand the tax base, conserve tax resources and ultimately achieve wins for mass employment, corporate profits and fiscal revenues,” he was quoted as saying, referring to the corporate tax cuts.

Mr Li’s comments come amid growing official concern over China’s slowing economic growth and its impact on the labour market.

Chinese authorities plan to set a lower economic growth target of 6 to 6.5 percent in 2019, compared with “around” 6.5 percent in 2018, sources told Reuters, as weakening domestic demand and a damaging trade war with the United States drag on business activity and consumer confidence.

Analysts expect that China’s economy grew around 6.6 percent last year, its slowest pace since 1990, and it is expected to cool further in coming months before a slew of support measures start to kick in.

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