THE government will adopt a more vigorous fiscal policy to help tackle external uncertainties without resorting to strong policy stimulus, according to a government meeting.

Measures will be taken to promote effective investment focusing on addressing inadequacies, gathering more momentum and improving people’s livelihood, according to the State Council’s executive meeting chaired by Premier Li Keqiang on Monday.

Slowing economic growth has sparked a heated debate among government researchers on whether fiscal policy should play a bigger role in softening the impact of a trade war with the United States.

“The proactive fiscal policy will become more active,” said a statement issued after the State Council meeting.

The government will deliver a tax cut of 65 billion yuan (US$9.6 billion) by expanding a preferential policy for small technology firms to all firms, on top of an initial goal of cutting taxes and fees by 1.1 trillion yuan this year, the State Council said.

The fiscal policy will focus on cutting taxes for companies while the pace of local governments’ special bond issuance will be quickened, the statement said.

Efforts will be stepped up in issuing 1.35 trillion yuan of special bonds for local governments to see more tangible progress on ongoing infrastructure projects.

China will keep liquidity ample and maintain appropriate total social financing under its prudent monetary policy, which will be neither too tight nor too loose, it added.

The government will step up efforts to ensure delivery of the State financing guarantee fund, targeting 140 billion yuan of loans for about 150,000 small and micro firms each year.

The meeting also decided to deepen investment reform to solicit more private investment in fields including transportation, telecommunications, oil, and gas.

Capital demand for ongoing projects must be guaranteed effectively, it said.

In an unexpected move Monday, the central bank lent 502 billion yuan to financial institutions via its one-year medium-term lending facility, stepping up efforts to support lending.

China’s regulatory tightening has driven up corporate borrowing costs, prompting the central bank to cut banks’ reserve requirements three times this year, with further cuts widely expected.(SD-Agencies)