Your daily digest of the biggest business news in China, translated and summarized every day.
China's real estate sector next cab off the rank in VAT reform
China's troubled real estate sector is set to be the next industry off the rank in terms of a long-term plan to shift how various industries are taxed.
The real estate industry will follow transport, logistics and other service industries in being taxed via a value-added tax rather than levying a business tax.
China's State Council has said it wants to start collecting taxes across all industries via a value-added tax rather than via corporate tax, as part of the country's most recent 5-year plan.
The shift could begin as soon as March 2015, according to a report in the Economic Information Daily.
The report also says it is likely that the value-added tax will be levied at a rate of 11 percent.
The reforms could result in a reduction of 500 billion yuan in tax payments from the sector.
China to tax iron ore according to value
China will soon start taxing domestically mined iron ore according to the value of the ore mined rather than the volume, reports China’s National Business Daily.
Citing an unnamed source, the report says the move is in keeping with a shift in the way resources are taxed in the country and follows the introduction of a value-based tax for coal resources at the start of this month.
However, before the switch to a tax based on prices, the existing 'iron ore fee' and 'resource tax' will be merged and set proportion of the funds raised will be allocated to the central government.
There is still no agreement on exactly how the revenue will be shared between central and local governments.
In the past, the 'iron ore fee' was collected by local governments.
Xi Jinping backs 'free-trade area strategy' at Politburo meeting
China's president Xi Jinping made a call to quicken the implementation of the country's 'free-trade area strategy,' at a meeting of the Political Bureau of the CPC Central Committee on December 5.
While the Politburo's decision to initiate criminal proceedings against and expel former internal security chief Zhou Yongkang from the party dominated headlines over the weekend, the president also made some statements on the importance of pursuing a free trade agenda on ongoing economic reforms at the meeting of the peak political body.
In addition to a decision to officially lift the free trade agenda to a 'national strategy', Xi also encouraged the establishment of a new kind of open economic system.
The president send that the 'free-trade area strategy' was an important part of China's new round of opening-up and also noted that global trade is undergoing its biggest restructuring since the Uruguay round of WTO trade talks in 1994.
The Chinese president noted that accelerating the FTA strategy was an important way for China to participate in establishing the norms of international economic and trade.
Xi called for more free-trade agreements but noted that more attention should be paid to the quality of these FTAs.
China should lower its government savings: banker
One of China’s leading bankers has urged Chinese governments to save less to reduce the country’s abnormally high savings rate level.
Liang Hong, chief economist of China International Capital Corp, one of the country’s top investment banks, says Chinese governments are one of the biggest savers in the country. All levels of Chinese governments have RMB 4 trillion in saving.
Liang says China’s controversial stimulus package is largely funded by corporates and banks.
Liang added that the government’s fiscal position is still strong and need to be reduced to boost the economy.
RMB 2.8 trillion of local debt due in 2015
RMB 2.8 trillion worth of local government debt is due for payment next year, according to Moody’s, a ratings agency.
An analyst from China's Industrial Bank estimates over 50 per cent of new loans have been used to pay off existing debt and the estimate is likely to rise to 53 per cent. Local government revenue is heavily dependent on land sales.
Overseas graduates earn less than RMB 5,000
The average monthly income for Chinese students with overseas qualifications is less than RMB 5,000, according to a new government White Paper.
China has 3 million students studying for degrees abroad with 73 per cent of them choose to return to the country after they finish their degree programs.
47.3 per cent of students seek educational opportunities abroad after completing their bachelor degrees and 33.5 per cent of students attend universities overseas after finishing high schools in China.
Beijing embraces private railway investment
China will allow the private sector to invest in and manage railway lines, according to a senior official from the National Development and Reform Commission.
Early this year, the Commission approved the construction of a new coal freight railway from Inner Mongolia to central China. Non-central government investors contributed 80 per cent of the total cost of construction, which is estimated to be RMB 193 billion.