Beijing (AFP) – China is looking to slash taxes on home purchases as the government strengthens fiscal support for its ailing real estate sector, a media report said on Tuesday. Regulators are preparing a proposal that would enable major cities such as Shanghai and Beijing to reduce the deed tax for buyers to as low as one percent from the current level of up to three percent, Bloomberg News said, citing people familiar with the matter.
The property sector has long accounted for around a quarter of gross domestic product and experienced dazzling growth for two decades, but a years-long housing slump has battered growth as authorities eye a target of around five percent for 2024. China is trying to shore up the sector, and said in October that it would boost credit available for unfinished housing projects to more than $500 billion.
Beijing has in recent months also announced a raft of measures aimed at boosting economic activity, including rate cuts and the easing of some home purchasing restrictions. China last week unveiled an ambitious plan to relieve public debt, aiming to turn local governments away from belt-tightening practices that have exacerbated the domestic downturn. Policymakers approved a proposal to swap six trillion yuan ($840 billion) of hidden debt belonging to local governments for official loans with more favourable terms.
Hidden debts are defined as borrowing for which a government is liable, but not disclosed to its citizens or to other creditors. This move would free up space for local governments to better develop the economy and protect people’s livelihoods, state broadcaster CCTV said. Lawmakers are also eyeing the possibility of escalating trade tensions following Donald Trump’s re-election, with China’s top economic planning body on Monday urging the government to bolster domestic demand.
Trump has promised punishing tariffs on Chinese goods that threaten further grief for the world’s second-largest economy, which is already grappling with sluggish consumption on top of the prolonged housing crisis. “In the coming period, the dominance of the domestic market in the economic cycle will become increasingly apparent,” according to a commentary written by the National Development and Reform Commission (NDRC) in China’s Economic Daily. Focusing on lifting domestic demand is not only a “strategic necessity for national development but also mitigates the impact of external shocks and declining external demand”, the NDRC added.
© 2024 AFP
