(Yicai Global) March 5 -- Major Chinese consumer electronics maker TCL saved CNY120 million (USD17.9 million) on tax last year, according to its chairman, mainly because new policy removes research and development costs from a company's taxable income.

The electronics giant spent more than CNY5 billion (USD746 million) on R&D last year, Li Dongsheng, who is also a deputy to China's legislature, the National People's Congress, said in a recent interview with Yicai Global. Based in Huizhou, Guangdong province, TCL also saved CNY80 million on tax in 2017.

The manufacturing sector has greatly benefited from China's tax and administrative fee cuts over the past two years, he said, but the country can still do better in managing the capital market, from banking to finance and taxation.

The present business environment coupled with capital constraints will make it more difficult and expensive for all firms to secure financing, Li said, adding that this won't be a problem for well-run enterprises, whether they are public or private.

China plans to cut the rate of value-added tax for manufacturers by 3 percentage points to 13 percent this year, it was announced in a budget report published today at the start of the 13th National People's Congress in Beijing.

The financial system is partly to blame for the current fiscal problems because large banks have high administrative costs and find it hard to profit from loans to small- and mid-sized companies, particularly small and micro firms, Li said. Such loans bear higher risk, he added. He suggested that local and internet-based lenders are more suited to the small loan business.

Shanghai's forthcoming science and technology innovation board will offer better advantages to startups, providing them with more opportunities for innovation, Li said, adding that the new trading venue focuses on a company's prospects rather than past performance. Its pilot registration scheme sidesteps regulatory review, and relies instead on market demand for listings.