Analysing The Effects Of The Accelerated Depreciation Policy On Fixed Assets

In recent years,the growth rate of China's manufacturing fixed asset investment(excluding farm households)for the purchase of equipment and tools has been declining.This has led to overcapacity in traditional industries in the real economy and insufficient development in emerging industries.In today's “New Normal” economy,these impact have an adverse effect on economic growth.To this end,China has successively issued two important documents on accelerated depreciation of fixed assets,Caishui [2014] No.75 and Caishui [2015] No.106,to promote supply-side structural reforms.The policy supports enterprises in six industries and four fields,especially small and micro enterprises,to update their fixed assets,and encourages enterprises in all industries to invest in research and development.Caishui [2019] No.66 further released the bonus of accelerated depreciation tax benefits to all manufacturing enterprises.Since2014,the new policy Accelerated Depreciation of Fixed Assets has been implemented for five years,and the scope of the concessionary industry and its intensity continued to increase.Therefore,it is necessary to analyze and evaluate the effect of the implementation of the new policy to provide a reference for further improvement of relevant policies.This paper uses differences-in-differences method and draws on the panel data of listed companies from 2010 to 2017 to test whether the accelerated depreciation of fixed assets policy has the effect of “encouraging corporate investment and promoting industrial technology upgrading.” The study found that the policy increases the investment in fixed assets,and it promotes the upgrading of enterprises marked by increased productivity.The analysis of enterprises of different ownerships found that the policy can promote state-owned enterprises' investment in fixed assets,but did not enable state-owned enterprises to achieve upgrades.Private enterprises,however,showed completely opposite results.Based on the results of the study,this article argues that the Accelerated Depreciation of Fixed Assets policy is generally in line with the goals of supply-side reform,and has played the role of “encouraging fixed asset investment and promoting industrial technology upgrades.” The policy provides ground for the expansion of depreciation tax policies,while there is still room for future improvement.