Tax breaks stimulate corporate China


The article discusses the impact of new round of tax breaks ,announced in China last year , in a move to stimulate growth . The  Valued Added Tax, or VAT, was brought in to replace business tax, releasing a 500 billion yuan windfall for companies . This move is intended to increase Investment and Consumption in the Chinese economy through a Expansionary Fiscal policy.

Topics include Taxes (T), Fiscal Deficit, Expansionary Fiscal Policy and Economic Growth. Use the National Income equation and AD/SRAS, LRAS diagrams to explain the role of above-mentioned tax breaks in bringing about growth in Chinese Economy.


Evaluation will cover implications of a Expansionary  Fiscal Policy on National Income, Unemployment Levels and Inflation. Consider short term and long-term impact on Consumers, Producers, Society and Government.