The business sector in the Hong Kong Special Administrative Region welcomed the Chinese central government's preferential tax and fee reduction policies, saying these can alleviate the financial burdens of smaller enterprises to support business recovery.

On March 24, the State Council announced an extension for some favorable tax policies and fee cuts worth over 480 billion yuan ($69.7 billion) annually for eligible corporate research and development spending, small and medium-sized enterprises and coal imports.

"By increasing the pre-tax deduction ratio of corporate R&D expenses from 75 percent to 100 percent and implementing it as a long-term institutional arrangement, the move can provide incentives to encourage manufacturing companies to invest more resources in R&D and enhance their strengths," Allen Shi-Lop-tak, president of the Chinese Manufacturers' Association of Hong Kong, told China Daily via an email inquiry.

Meanwhile, economists from major investment banks and credit agencies expect that China possesses the financial arsenal to boost the economy in the form of fiscal policy if needed.

"Fiscal policy will likely stay proactive with strong infrastructure funding, targeted tax and fee cuts and potential consumption support," stated Hu Yifan, regional chief investment officer and Asia-Pacific head of macroeconomics at UBS Hong Kong.

The Switzerland-based investment bank said the 5 percent gross domestic product target and other economic objectives set by the National People's Congress sets a minimum baseline with room for growth to overshoot and fiscal levers to kick in if necessary.

"We believe the recovery in China will be largely organic, led by consumption and services. Our gross domestic product growth forecast of 5.5 percent exceeds the target of around 5 percent announced at the National People's Congress meetings in March," predicted Louis Kuijs, S&P Global Ratings chief economist.

"From our perspective, Beijing set that target at a relatively unambitious level to provide room for policy to respond to inflation or financial risks if needed," Kuijs added.

Moody's Analytics said investment spending in China has registered strong annual growth among State-owned enterprises, which indicates the effect of government fiscal stimulus to kick-start the economy this year. It is expected that China's recovery will be gradual with a slow acceleration of consumer spending, with investment expected to lead the economic recovery.