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ECONOMY

China Scraps 41 Administrative Fees in Bid to Stimulate Growth

By Fran Wang

(Beijing) — China will scrap or suspend 41 nontax government charges and halve trademark registration costs beginning next month, the government has said, as it continues to seek to reduce burdens on companies and consumers to stimulate economic growth.

Starting from April 1, the government will declare invalid or halt the levying of administrative fees on activities and events such as marriage registration, halal food certification, official inspection and quarantine of cross-border goods, and real estate transfers, the Finance Ministry said Thursday.

Trademark registration fees will be cut by 50%, the ministry said in a statement jointly published with the National Development and Reform Commission (NDRC), China’s top economic planning agency.

Authorities “must not use excuses to protract or refuse to implement” the policy, it said.

Beijing has said it will take a “more active” fiscal policy this year to bolster economic growth. Premier Li Keqiang told the country’s top legislature earlier this month that the government will slash 350 billion yuan ($50.8 billion) in taxes and 200 billion yuan in administrative fees to let companies “concretely feel the benefit.”

The Finance Ministry said last week that the government will revoke or adjust some charges related to urban construction and the employment of disabled workers as of next month. Analysts estimate the move will reduce the burden on firms by more than 40 billion yuan.

China’s high tax levels and various other government charges, sometimes imposed in a discretionary and opaque manner, have drawn increasing complaints from business owners as their companies’ profitability has been squeezed amid the country’s economic growth slowdown.

Some experts have also blasted the country’s business tax system as stifling corporate development and dragging down economic growth, which authorities have dismissed as “misleading.”

Cao Dewang, chairman of Fuyao Glass Industry Group Co. Ltd., China’s leading supplier of automotive glass, in December defended his decision to spend more than $1 billion in building manufacturing facilities in the United States in an attempt to take advantage of lower taxes.

Zong Qinghou, chairman of food and beverage giant The Hangzhou Wahaha Group Co. Ltd, previously also voiced concerns that his company had to pay more than 500 fees to different government agencies, and those costs exceeded 40 million yuan in the first 11 months of 2016.

The Finance Ministry and the NDRC in January confirmed that Wahaha and its affiliated firms paid a total of 74.1 million yuan in 212 nontax fees in 2015.

“The issue raised by Wahaha showed that companies have become more sensitive to fee burdens under growing downside pressures on the economy,” the two agencies said back then, pledging to take “effective measures” to regulate and reduce such charges.

Contact reporter Fran Wang (fangwang@caixin.com)

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