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Business / Policy Watch

China issues tax breaks to boost employment

(Xinhua) Updated: 2014-04-30 08:08

BEIJING - Business startups and employers willing to hire the jobless will receive tax breaks as the Chinese central government looks to encourage employment amid the economic slowdown.

Businesses established by registered unemployed workers are allowed a maximum annual tax reduction of 9,600 yuan ($1,559.56), according to a joint statement led by the Ministry of Finance (MOF) on Tuesday.

Companies set up by new graduates, people who have been out of work for over six months and those living on government aid, as well as residents from zero-income families also qualify for the policy.

China issues tax breaks to boost employment

China issues tax breaks to boost employment

Firms that hire the jobless for over a year will enjoy an annual reduction of 5,200 yuan for every job opportunity provided, the statement said.

The move was a renewal of previous pro-employment measures that expired at the end of last year, with wider coverage, no restrictions on industries and simplified administrative procedures. The new policy will stay effective until Dec 31, 2016.

China has been confronted with a tough employment situation due to slowing economic growth, with an increasing number of jobless people, including college graduates, migrant workers from rural areas, veterans and employees from enterprises in sectors plagued by overcapacity.

Around 10 million new jobs are created in China every year, but there are 26 million people unemployed.

Analysts believe the new policy will bring down the cost of establishing a business, relieve operating burdens of existing companies and make market entities more dynamic.

Bai Jingming, an MOF official, said graduates will benefit the most as the policy firstly encourages enterprises to employ college graduates, the number of whom will reach 7.3 million this year.

The new policy, covering more unemployed people, is consistent with the national adjustment in its industrial structure by including enterprises in the emerging services sector which serve as one of the major employers in China, Bai said.

In the first quarter of the year, China's employed population in urban areas increased by 3.44 million, with the registered unemployment rate at 4.08 percent, data from the Ministry of Human Resources and Social Security showed.

China's economy expanded 7.4 percent year-on-year in the first quarter, slowing but outpacing market expectations and leading global growth.

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