A proposal to double China’s tax-free allowance to 10,000 yuan (US$1,389) per month would “dare people to spend”, according to delegates at the ongoing “two sessions”, with boosting consumption seen as “key to a sustained economic rebound” this year.
National People’s Congress (NPC) delegate Zhang Xuewu, who is chairman of snack giant Yanker Shop Food, told the Shanghai-based The Paper on Sunday that he would put forward the proposal to free up disposable income.
“Resuming and expanding consumption is the key to a sustained economic rebound in 2024,” Zhang said.
“[The government] should raise residents’ expectations for disposable incomes and boost consumer confidence, so that people dare to spend.”
China’s central government should take lead in consumption boost, adviser says
China’s central government should take lead in consumption boost, adviser says
China’s tax-free allowance of 5,000 yuan per month has been in place since 2018.
Consumption has been the major driver for China’s post-pandemic rebound, with the world’s second-largest economy battling an ongoing real estate crisis and a fall in external demand.
It contributed 82.5 per cent of gross domestic product growth last year, marking a 43.1 percentage point increase from a year earlier, according to the National Bureau of Statistics.
The 5,000 yuan threshold has been applied to our country for so many years that it really needs to be raised
“The 5,000 yuan threshold has been applied to our country for so many years, and it really needs to be raised,” Dong told Chinese media on Sunday.
Dong said the change could reduce the time for residents to file their tax returns and have them audited, while also eliminating the need for fraudulent tax returns.
Why China may have to ‘push harder’ to maintain its economic growth in 2024
Why China may have to ‘push harder’ to maintain its economic growth in 2024
Dong has been a deputy of China’s top legislature for five consecutive terms since 2003, and has previously proposed similar tax reforms.
“The country is now issuing many education subsidies, pension subsidies, etc. In fact, [the effect of] these subsidies almost equalled the tax threshold reaching 10,000 yuan, so why can’t [we raise the tax threshold] all at once?” she said.
China’s annual parliamentary gatherings started on Monday with a meeting of the top advisory body, the Chinese People’s Political Consultative Conference (CPPCC).
CPPCC spokesman Liu Jieyi on Sunday cited spending increases over the Lunar New Year holiday when describing China’s economic prospects as “[having] great potential” and being “full of vitality”.
The holiday in February this year lasted eight days, but the figure would have fallen by 4.3 per cent and 21 per cent, respectively, from 2023 and 2019, if it was adjusted to seven days as seen in previous years.
China’s disposable income per capita in 2023 stood at 39,218 yuan (US$5,449), representing an increase of 6.1 per cent from 2022, according to the statistics bureau.
Zhang also advised increasing incomes for farmers by liberalising transactions and mortgages for their properties.
