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Equipment upgrades through greater depreciation
2014-01-20
By Ren Zeping, the Department of Macroeconomic Research, the DRC
Research Report No 235, 2013
Abstract:
China's current fixed assets depreciation mainly relies on the linear depreciation method, which covers a small range, follows strict regulations, and needs a long period before changes occur. This is different from those of developed countries, which leave us far behind. The relatively heavy cost in the early stages of fixed assets, the lengthy time for equipment renewals and the outdated technology obviously affect industrial transformations in China and competitiveness around the globe. This report suggests that the speeding-up of depreciation can be used as the main method to cut tax burdens by enlarging applications and shortening the years of low depreciation.
