China cuts small-car tax to boost auto sector

China's Cabinet said Wednesday it will temporarilly cut the sales tax on small cars in half in an effort to stimulate the auto and steel sectors, the state-run Xinhua news agency reported.

Under the plan, the tax on cars with engines smaller than 1.6 liters will be taxed at 5%, down from 10%, effective Jan. 20 and continuing until the end of the year.

The State Council said the move was meant to shore up China's two "pillar industries," Xinhua said.