China is going to reduce the value added tax for the manufacturing sector of the economy by 3%. This was recently announced by the country's prime minister. Thus, the new VAT will be 13% as opposed to the old 16%.
The PRC government believes that such measures will greatly simplify the life of entrepreneurs who suffer huge losses from the trade war with the United States. Many firms and enterprises are on the verge of bankruptcy and are experiencing problems with debt payments. Reducing the value added tax will increase their income and help keep them afloat. It will also foster technical innovation among manufacturers.
Previously, it was expected that the new economic changes will take effect only in mid-May. Due to Li Keqiang's recent speech, the quotes have crept in different directions. However, prices for various types of non-ferrous metals still prevail.
For example, zinc futures rose from 370 yuan per tonne at the close of trade on March 4 to 450 yuan per tonne on March 5.
