Ministry of Finance in Beijing Photo: VCG

China's Ministry of Finance announced measures on Monday to support the city of Shenzhen, South China's Guangdong Province, to explore innovative fiscal and taxation policies that will facilitate high-quality economic development and technological breakthroughs, and further accommodate its role as a pilot demonstration area of socialism with Chinese characteristics.

Fiscal policies should be formulated to support deeper innovation-driven development. Relevant policies should encourage social forces to donate to government science funds, and encourage enterprises to scale up technological input. 

The ministry also supports Shenzhen to explore and establish stimulating mechanisms in research and development (R&D), attract and encourage leading enterprises, specialized and new enterprises, and social organizations to invest in large-scale R&D projects and increase R&D investment. 

New fiscal policies will strengthen cooperation between Shenzhen local participants with state-level funds, and encourage such funds to invest and develop in Shenzhen, based on market principles, so as to help key industries to complement, strengthen and extend industrial chains. 

The modern fiscal and taxation system is needed to promote financial connectivity and technological cooperation within the Guangdong-Hong Kong-Macao Greater Bay Area. 

For example, it supports Shenzhen to continue issues of offshore yuan-denominated local government debt, while also urging local regulators to study taxation policies for the Shenzhen section of the Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone in Futian district, which borders Hong Kong. 

The Ministry of Finance supports Shenzhen to conduct trials of national taxation reform, and Shenzhen will continue to be an innovative field, "creating more experience that is applicable at the national level," read a statement on the ministry's website. 

In 2020, China issued a plan on implementing pilot reforms in Shenzhen to build the city into a demonstration area of socialism with Chinese characteristics in the subsequent five years.