Government urged to abolish interest tax on bank savings

(Xinhua)
Updated: 2007-03-10 14:03

"But the macroeconomic environment has changed and China's economy has grown out of deflation. Therefore, to continue such a policy seems unnecessary," Qin said.

Renowned economist Wu Jinglian, also member of the National Committee of the Chinese People's Political Consultative Conference, said that the interest tax on savings deposits has failed to reduce individual saving and showed no obvious effects on stimulating domestic consumption.

A recent central bank report indicated that China's Renminbi saving deposits reached 15.97 trillion yuan at the end of November last year, up 15.3 percent year-on-year.

China's high savings rate is attributed to low consumer confidence because of high employment pressures and costly education, housing and medical care, analysts say.

The government has said that it will redouble the efforts to stimulate domestic consumption in 2007, mainly by raising the incomes of farmers and low-income urban families.

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