China cut tax on stock transactions

In an effort to reinvigorate confidence in its stock market, China took a bold step by announcing a drastic measure. The Asian country has cut the tax on stock transactions in half, marking the first change of its kind since 2008. The reduction, which takes effect on Monday, represents a significant change compared to the previous tax of 0.1 %.

The Ministry of Finance, together with the entity in charge of taxation, issued a joint statement detailing their intentions. “In order to instill dynamism in the capital market and strengthen investor confidence, a reduction in stamp duty on securities transactions is announced, which will take effect on August 28,” they stated.

This measure seeks to attract again investors who had lost faith in Chinese assets, a strategic move by the government amid the economic slowdown affecting the country. Mainland China’s financial sector was eagerly awaiting this news as it has been grappling with the negative impact of various factors such as the real estate debt crisis, low consumer spending and alarming youth unemployment.

The CSI 300 index, which includes the main capitalizations of the Shanghai and Shenzhen stock markets, has experienced a decline of around 4 % in 2023, adding to two consecutive years of declines. This fall has been partly a result of the lack of a significant economic recovery in China after the ravages of the Covid-19 pandemic. With this new fiscal policy, the Chinese government is undoubtedly looking to change this trend and revitalize its stock market in a challenging economic context.

K. Tovar

Source: Bancaynegocios

(Reference image source: Unsplash+)

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