BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/40
The government is trying to better focus and expand funding for infrastructure projects. China has e.g. lowered the minimum capital requirement for construction of ports, airports, railways and highways. The finance ministry also announced changes in the terms of new public-private partnership (PPP) projects to make them more attractive to private investors. The launches of some projects scheduled for 2016 have been moved up.
Policy banks have been instructed to support infrastructure investments through issuing bonds, with the investment aimed at local governments. The China Development Bank and Export-Import Bank of China have received additional funding from the State Administration for Foreign Exchange (SAFE) for the same purpose. To support firms, the government will expand tax breaks and tax advantages now granted small firms to larger firms as well. In addition, incentives to engage in R&D activity will be increased and broadened. The government also hopes to increase foreign trade through cuts in certain import and export duties.