Tax cuts 'could be prelude to policy switch'

China's decision to extend tax cuts to more micro and small businesses may herald a more proactive fiscal policy this year amid unprecedented downward pressure, according to economists, while some traders feel more can be done to help them.

The State Council, China's cabinet, decided on Wednesday that from this year until the end of 2017, companies with annual taxable income of less than 200,000 yuan ($32,573) will have their corporate income tax rate halved to 10 percent. Previously, the threshold was 100,000 yuan.

Vice-Finance Minister Shi Yaobin said on Friday it is the fourth time in the past five years that tax breaks have been expanded for micro and small companies, which contribute more than 70 percent of jobs created in China each year.