China will issue an additional set of policies to further cut 400 billion yuan ($63.8 billion) of tax this year, following the announcement of value-added tax reform on March 28, officials from the Ministry of Finance said on March 30.

That means the 2018 tax reduction target amounting to 800 billion yuan planned in the government’s annual working report will be achieved soon, said Wang Jianfan, director-general of the Ministry of Finance’s tax policy department, at a press conference.

The newly announced measures such as cutting value-added tax rates, as part of a tax reduction package this year, are expected to ease enterprises’ tax burden of nearly 400 billion yuan, or half of the annual tax cut plan, and the manufacturing producers would benefit the most from the reform, the official said.

According to the reform plan, the tax rate for manufacturing will be lowered from 17 percent to 16 percent, and for transportation, construction, basic telecommunications services and farm produce from 11 percent to 10 percent.

“This round of tax reform will focus on supporting the manufacturing industry, as it is an important part of the real economy and also the foundation of overall economic development,” said Xu Hongcai, assistant minister of finance.

All businesses registered in China, be they joint ventures or wholly foreign-owned companies, will be treated equally, he said.

Huang Zhilong, head of the macroeconomic research center under the Suning Institute of Finance, said the tax cut will stimulate investment in the industrial sector, especially for manufacturing companies, to further lift their profitability and competition in the global market.

“Further tax cuts are expected in the coming months, and this year’s total tax cut will be as large as twice the average annual reduction during the past five years,” Huang said.

In order to support small and micro-sized companies, a national financing guarantee fund will be initiated by the central government, with an initial amount of at least 60 billion yuan, according to the finance ministry officials.

The fund, to be used mainly for equity investment and re-guarantee, could also support the agriculture sector and innovative startups, said Wang Yi, director-general of the finance department at the ministry.

An estimate from the ministry showed that within three years, the fund is expected to support nearly 500,000 small and micro-sized companies, adding guaranteed loans of about 500 billion yuan, which will account for 25 percent of the total amount of nationwide financing guarantee business.

Wang disclosed at the press conference that the newly-merged banking and insurance regulatory commission is working on a policy framework to channel commercial banks’ investment into the fund.

Commercial banks, which have advantages in better understanding the market environment and clients’ credit demand, will be encouraged to invest money into the fund and share the potential return as well as risk with the government’s fiscal fund, he added.