BEIJING — China has earmarked 400 billion yuan (about $62.9 billion) of transfer payments to help local governments handle pressure from tax refunds, an official said on March 23.

The advance allocation was made on March 21 — days before April 1, the scheduled date for the country to begin increasing the scale of value-added tax (VAT) credit refunds to bolster small businesses, Vice-Minister of Finance Xu Hongcai told a press conference.

China has vowed to allocate 1.2 trillion yuan of transfer payments in aggregate in 2022 to support local governments' work to reduce taxes and fees and improve the people's well-being, Xu said, stressing that the amount is sufficient to offset the loss in fiscal revenue brought by tax refunds.

The transfer payments will help ensure the country's tax refund policy is fully implemented and local finance operates steadily, Xu said.

China's total VAT credit refunds are at approximately 1.5 trillion yuan this year, with nearly half of all refunds undertaken by local governments.