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China is turning inward, as exports dwindle in the face of weak demand from the U.S. and Europe. In a move to boost internal spending, the Chinese regime is making major income tax law changes. But what will this mean for millions of Chinese wage earners? Here's the story.
A new personal income tax law went into effect in China on September 1. People now earning less than 3,500 yuan, or about $500 per month will no longer have to pay personal income taxes. This means that in a country of almost 1.3 billion, only about 24 million will have to pay personal income tax.
The new law is expected to drive up personal income, which the Chinese regime then hopes will be pumped into the economy.
[Lin Jiang, Director Dep. of Economics, China Youth University]:
"After the raising of individual income tax threshold, many Chinese, especially the mid-and-low-income groups with more disposable income, will spend more money. Then the consumption will stimulate China's economic growth."
With the change in law, nearly 60 million people, about the population of the U.K., will no longer have to pay income tax.