Full transcript of policy briefing of the State Council on Feb 27, 2015

People’s Daily:

I have two questions for Mr Wu.

There are some administrative approval items that will be canceled or transferred to lower levels in the reform. This is a major move. In what areas will we see the actual difference?

And, how do you classify and categorize what items will be targeted in the reform?

Wu Zhilun:

We focus on items concerning enterprises and citizens, especially items that require many and frequent approvals from the government. Also, items with were the subject of numerous complaints were reformed.

Regarding the second question, we carried out the reform according to a clear process.

First, opinions were proposed and then we examined if these were reasonable. Third, we then held specific meetings with specialists to help advise us.

There are situations where we hold different opinions with the department proposing various ideas. Our biggest concern is reducing risk. For instance, approval is needed to transfer diseased wood from one province to another. Some related ministries proposed that the approval was not necessary. However, we decided to keep the approval procedure after considering all the factors.

Reporter from Japan:

I have one question. I would like to get some numbers to understand the results of tax breaks for business. How many enterprises will enjoy the preferential tax, how much tax will be cut and to what extent it will affect the national finances?

Shi Yaobin:

You asked about how many businesses will enjoy the preferential tax and how much money will be cut when extending tax-break policies to more micro and small businesses. Well, this number is changing all the time as the profits the enterprises made are changing. There are a number of micro and small businesses which are newly established, have just changed their business models or are no longer operating. I can say that it is a changing number. According to preliminary research, 2.46 million businesses enjoyed the preferential tax with a total cut of over 10 billion yuan ($1.6 billion) up to Dec 31, 2014. Its share of the fiscal income is rather low. However, I don’t think we should estimate the policies’ effectiveness by its share in the fiscal income. We should look at how much tax was cut for a business before and after the policy and how it affects its profits.

From this perspective, according to our calculations, our support to micro and small businesses which had profits under 0.2 million yuan is unprecedented. It is very strong. Thank you.

Hu Kaihong:

That is the end of today’s policy briefing. The briefing will be held again after the two sessions.