On Sunday the Ministry of Finance announced that it will lower stamp duty from 0.2 to 0.1 percent, effective from today.
An official from the ministry said the cut, which has been approved by the State Council, the Chinese cabinet, is intended to help promote the growth of the securities markets.
Experts say the move will reduce stamp tax revenues by billions of yuan per year, but the decision is good news for the country's bearish stock markets, which slumped to nearly six year-record lows last week.
Enthusiasm for investment has been undermined in the past several years, owing to irregularities amongst listed firms and securities firms, and structural problems in the stock market system.
A 0.6 percent stamp tax was imposed on stock transactions when the Chinese stock markets were created in 1990, and has since been adjusted a couple of times.
In all, more than 100 billion yuan (some US$12 billion) in stamp tax on stock transactions has been collected.
(Xinhua News Agency January 24, 2005)