FAMILY STYLE: Solar panels supply power to the home of Mo Zhikai, a villager in Ningbo, east China's Zhejiang Province. Over 70 solar panels worth 200,000 yuan ($32,260) installed by Mo will provide power to his home and surplus energy will be sold to the state grid (GONG GUORONG)

Broader Tax Cuts

China pledged to expand a reform program to replace business tax with a value-added equivalent, in place across pilot sectors since August 1, in the hope of further easing the burden on smaller businesses.

The expanded pilot scheme will include enterprises in the radio, film and television industries, alongside those operating in transport and some modern service sectors, said Premier Li Keqiang.

As a vital step in fiscal reform, value-added tax has achieved remarkable results in easing the burden on businesses and promoting economic transformation, Li added.

The nationwide expansion will eliminate policy differences between pilot and non-pilot regions. The program will help cut 120 billion yuan ($19.37 billion) in levies for companies in 2013.

"The earlier-than-expected expansion sends a signal that the government is speeding up fiscal reform," said Liu Shangxi, Deputy Director of the Research Institute for Fiscal Science under the Finance Ministry.

The value-added tax reform was first introduced in Shanghai in January 2012 and was later expanded to other cities and provinces.

Trade Friction Woes

Alongside the rise in foreign trade volume, soaring trade remedy probes are vexing the world's second largest economy.

Twenty-one countries initiated 77 trade remedy investigations targeting Chinese products, up 11.6 percent from 2011, said the Ministry of Commerce (MOFCOM) on April 8.

The probes involved $27.7 billion in trade, a year-on-year surge of 369 percent from 2011. Among the most notable cases was the European Union's anti-dumping investigation into imports of solar panels and key components from China.

In March, China's Permanent Representative to the WTO, Yi Xiaozhun, warned that China should be mindful of increasing trade friction with European countries and the United States, as they are adopting increasingly harsh measures against Chinese exports.

Over half of the world's countervailing measures are directed against China, said Yi.

Song Ping, an investigator with the MOFCOM, said that the soaring amount of cases have grown out of China's speedy economic expansion and rocketing foreign trade.

He attributed the issue to growing trade protectionism following the global financial crisis and the imbalanced market goals of Chinese enterprises.

In the first quarter of 2013, China was targeted by 22 such cases, up 22.2 percent from the same period of 2012, the MOFCOM said.

Inflation Drops

China's consumer price index (CPI), a main gauge of inflation, rose 2.1 percent year on year in March, down from a 10-month high of 3.2 percent in February, mostly attributed to dropping food prices.

Such prices, which account for nearly one third of weighing in calculating the CPI, edged up 2.7 percent year-on-year in March, much less than the 6 percent in February, said the National Bureau of Statistics (NBS).

Wang Jun, an economist with the China Center for International Economic Exchanges, said mild inflation in the first quarter laid a good foundation for achieving this year's inflation control target.

China aims to hold this year's consumer inflation to around 3.5 percent, according to the government work report released in March.

With China maintaining a prudent monetary policy this year, the country will not encounter intense inflationary pressure in the first half, Wang said.

Liu Ligang, an economist with ANZ National Bank Ltd., said the recent outbreak of the H7N9 avian influenza virus will weaken demand for meat products, which will help ease inflationary pressure in the next few months.

The CPI decline means the central bank is less likely to implement tightening policies in the next two to three months, Liu said.

"However, in the face of pressures from capital inflow and rising property prices, we believe the central bank will maintain a prudent monetary policy," said Liu.