China acted yesterday to steady its stumbling economy by cutting taxes for small firms and announcing plans to speed up the construction of railway lines.

The government said it will accelerate the construction of rail projects that have been approved, and increase the total length of lines laid this year by 18 percent compared to 2013.

It also said it would lower tax rates for smaller companies by relaxing the criteria that allows them to halve their income taxes. This policy will be extended to the end of 2016, the government said.

The measures come after Premier Li Keqiang said last week that the government was ready to provide support.

Two surveys of China's manufacturing sector this week raised fears the economy may be cooling faster than thought.

"We will find innovative ways including fiscal and financial methods to steady economic growth," the State Council said after a cabinet meeting yesterday.

The railway investment will be partly financed by bank loans, the government said. Authorities will also create an annual fund worth 200 billion yuan to 300 billion yuan each year that is open to private investors.

'New rules' set for China's capital markets

China is set to unveil its "nine new rules" for governing its capital markets, reports the Shanghai-based China Business News.

The new rules will reportedly traverse areas dealing with stock market registration reform, the development of the private equity market and refinancing, as well as corporate reorganization.

The rules are said to build on and provide more details regarding the six long-term market-oriented measures outlined by China's State Council on March 25. These are: continuing to steadily push forward registration reform, regulating the development of the bond market, fostering private equity markets, building the futures market, promoting innovative intermediaries, and continuing to expand capital market liberalization.

Analysts say the rules are in line with the overall direction of State Council and the China Securities Regulatory Commission, the country's main securities regulator, since the pivotal third plenary session of the 18th CPC Central Committee last November.

The early consensus is that the measures will benefit China's capital markets in the long-run, though it is unclear whether there will be any positive impact in the short-term as the emphasis is on regulatory reform. Others say that as market regulation will be strengthened there is a need to be wary of added risks.