* Government says to speed up railway construction
* Says also to cut taxes for small companies
(Adds quotes, detail)
BEIJING, April 2 China acted for the first time
this year to steady its stumbling economy by cutting taxes for
small firms on Wednesday and announcing plans to speed up the
construction of railway lines.
The Chinese cabinet said after its weekly meeting that it
will accelerate the construction of rail projects that have been
approved, and increase the total length of lines being laid this
year by 18 percent compared to 2013.
The government also said it would lower tax rates for
smaller companies by relaxing the criteria that allows them to
halve their income taxes. This policy will be extended to the
end of 2016, the government said.
The measures mark the first concrete action being taken by
China this year to boost its economy, and come after Premier Li
Keqiang last week sought to reassure jittery markets that
Beijing was ready to provide support.
Flagging growth has unnerved global investors and fuelled
speculation about a modest stimulus package to boost activity.
Two surveys of China's vast manufacturing sector showed this
week that factories faced persistent headwinds in March, raising
fears that the economy may be cooling much faster than thought.
"We will find innovative ways including fiscal and financial
methods to...steady economic growth," the cabinet said in a
statement on the government's website.
The Chinese government said in March that it aims to grow
the economy by around 7.5 percent this year, and a minority of
analysts believe growth will ultimately fall short of 7.5
Increased construction of railway lines will foster
investment, the biggest driver of China's economy, and which is
rising at its slowest rate in at least a decade as the country
moves towards consumption-driven growth.
The railway investment will be partly financed by bank
loans, the government said. Authorities will also create an
annual fund worth 200 billion yuan ($32.2 billion) to 300
billion yuan each year that is open to private investors.
For this year, the government will also sell 150 billion
yuan worth of bonds to pay for over 6,600 kilometres of new
Railway projects in China gained infamy in recent years for
their rife corruption and heavy debt load - problems that
culminated in a series of corruption scandals at the Ministry of
Railways that led to its dissolving in March 2013.
Projects are now overseen by China Railway Corp, which won
approval on Tuesday to sell 150 billion yuan worth of bonds,
according to two sources with direct knowledge of the matter.
($1 = 6.2069 Chinese Yuan)
(Reporting by Koh Gui Qing and Shao Xiaoyi; Editing by Toby