China's new finance minister Liu Kun to push for tax reforms

China’s new finance minister on Sunday vowed to push ahead fiscal reforms, including changes in tax on manufacturing and transportation, to support the government’s goal of “high-quality” growth.

Liu Kun made the comment at the China Development Forum in Beijing, in his first public speech since being appointed finance minister this month. He said that in 2018 China would reduce value-added tax levels for the manufacturing and transportation sectors, draft consumption tax legislation and implement a new performance review of budget management. Liu did not give details.

Liu called “invalid” a suggestion from an audience member that China had made little progress in developing a market-oriented economy.

“No one understands market economy better than Chinese people and Chinese government officials,” the minister said. He also said China would push forward property tax legislation and implementation, while further improving the transparency and efficiency of fiscal budget management. Reuters

Liu added that China would study a tax policy to promote foreign investment in the country and incentivize Chinese firms to invest overseas, as it faces up to the “new globalisation situation.”

Speaking at the same forum, Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development(OECD), said China’s value-added tax reforms were crucial to its transformation from a heavy industry-based economy to one with more value-added innovation and service sectors.

China also needs to remove an “implicit government guarantee for state companies”, Gurria said.

Market reforms

China pledged on Sunday to press ahead with market opening and reforms while reiterating that it will treat domestic and foreign firms equally and protect intellectual property rights.

The pledge on reform and equal treatment came from Vice Premier Han Zheng, at a time there are increasing prospects of a trade war with the US.