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'Makers' securing place as China's new economic drivers

(Xinhua) Updated: 2015-05-06 11:09

New growth engine

Premier Li's promise on Monday came in a letter to students from Tsinghua University, the prestigious science and engineering academy.

He called on young entrepreneurs to be pioneering, to dare to break with routine and to bring economic growth in the process.

The first signs of a big official push behind makers came in the government work report in March. The annual report mentioned makers for the first time and identified mass entrepreneurship and innovation as a new engine for economic growth.

It was obvious then that makers would be big participants in a 40-billion-yuan venture capital fund announced in January to help innovative firms in their early stages, especially in emerging industries.

On Friday, the State Council, China's cabinet, offered tax breaks to innovative startups and secured loans of up to 100,000 yuan for small firms. It promised to use fiscal revenues to help cover the interest.

Analysts have predicted that the government funding will attract private investors to bet on startups, with hundreds of billions of yuan likely to come flooding in.

Startups on the rise

The measures may have already started to take effect. The number of newly registered firms in China in the first quarter rose by nearly 40 percent year on year.

Small firms saved 24 billion yuan through tax reductions in the Jan-March period, with many enjoying a 50-percent cut in income tax, according to new official data.

These trends need to continue if China is to meet its targets. Nearly 80 percent of urban jobs are in small companies. The government has pledged to create more than 10 million urban jobs and ensure that the unemployment rate stays below 4.5 percent in 2015.

Some experts have suggested that the government should go even further in providing incentives for startups. "A three-year tax-free period for small, innovative firms should be considered in due time," said Wang Xiaoguang, a researcher with the Chinese Academy of Governance.

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