China will adopt a combination of fiscal and financial policies as an effort to boost the domestic demand amid trade war threat, the State Council’s executive meeting chaired by Premier Li Keqiang decided on July 23.

The government will issue targeted and well-timed regulations in the face of external uncertainties and ensure the economy performs within a reasonable range, and it will firmly refrain from resorting to a deluge of strong stimulus policies, the meeting announced.

The meeting agreed that a more proactive fiscal policy will be pursued. The government will focus on introducing deeper tax cuts and non-tax fee cuts, and more companies will be eligible for preferential policies of additional deduction of R&D spending in taxable income, a policy that is expected to cut another 65 billion yuan ($9.6 billion) in taxes this year, on top of an initial goal of cutting taxes and fees by 1.1 trillion yuan.