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Sowing the seeds of market innovation

By Xinhua | China Daily | Updated: 2015-05-01 07:30

The government has unveiled new measures to encourage people to start their own business in its latest effort to boost employment through entrepreneurship.

The government will introduce preferential tax policies, social security subsidies and easier business registration procedures this year, the State Council said in a statement after its meeting on April 21.

This was the Chinese cabinet's 13th executive meeting this year. Almost all of them have taken job creation as a key topic as economic growth plateaus in the world's second-largest economy.

The policies mainly focus on cutting red tape, taxation and fees while offering more preferential fiscal support to innovative young businesses.

"The government is doubling its effort to boost employment by not only lifting burdens for market players, but also injecting vigor into the market," said Zhu Lijia, a professor with the China National School of Administration, a State think tank.

China created 3.2 million new jobs in urban areas in the first quarter, and an official survey showed that its urban unemployment rate was "stable" at around 5.1 percent, unchanged from the rate in 2014.

The number of new companies in China continued to surge on government efforts to streamline the process for starting businesses.

About 844,000 new companies were registered in the first quarter, rising 38.4 percent from the same period last year, according to data from the State Administration for Industry and Commerce.

Between January and March, the number of newly-registered firms in tertiary industry rose 41 percent to 677,000, accounting for 80.2 percent of new companies. The government set up a 40-billion-yuan ($6.44 billion) fund to support emerging sectors in early January, a move expected to bring over 200 billion yuan into play.

China also lifted restrictions on minimum registered capital, payment deadlines, down payment ratios and cash ratios of registered capital on March 1 in a move aimed at encouraging start-ups and energizing the economy.

"Public innovation and massive entrepreneurship is one of the major engines powering the slowing economy and more measures should be taken to let the market play the leading role in allocating resources," Zhu said.

Hu Yijian, a professor with Shanghai University of Finance and Economics, believes that the government should take a more active fiscal policy amid downward economic pressure.

"There is still room for the government to reduce taxation and fees to reduce enterprises' burden," Hu said.

 

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