The world's most populous nation is moving toward raising its personal income-tax threshold.
Media reports out of China claim that anyone making 3,000 yuan a month -- or a little more than $450 -- would be exempt from paying income tax. The current threshold is 2,000 yuan.
This may not seem like much, but China International Capital Corp. claims that the move would free more than 20% of China's workforce from forking over income taxes. Giving China's working poor and lower middle-class families a little more left over every month should circulate more money into the country's economy.
Let's go over a few of the publicly traded companies that stand to benefit here.
Country Style Cooking
(Nasdaq: CCSC)-- The fast-growing chain of restaurants serving Sichuan-style comfort food offers cheaper meals than even some of the fast-food imports, setting diners back an average of $2 a meal.
(NYSE: CHL)-- Obviously, workers making less than $450 a month aren't going to be buying the latest smartphones, but China's leading wireless carrier should have an easier time moving its entry-level conventional cell phones here.
7 Days Group Holdings
(NYSE: SVN)-- As one of China's cheapest lodging chains, overnight guests pay an average of less than $25 for a room. 7 Days' attractive value proposition has helped it expand quickly. Hotels in operation have grown from 283 to 461 over the past year.
(Nasdaq: JOBS)-- As a provider of weekly job listings inserted in 16 different regional newspapers, 51job should benefit from an empowered lower working class.
China Xiniya Fashion
(NYSE: XNY)-- Xiniya sells men's formal and business-casual apparel in China. This may seem like the last thing that the poor care about, but Xiniya keys in on second-tier cities where its value-priced duds make more financial sense.
China Digital Television
(NYSE: STV)-- China is migrating to digital television by 2015, and this is the leading maker of smart cards to make it possible. Television isn't a luxury that is common among China's working poor, but this may be the kind of money-saving tax move to change that.
There will be more winners, naturally. Which stocks do you think stand to benefit from China relaxing its tax code? Share your thoughts in the comment box below.
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Country Style Cooking Restaurant Chain, 51job, and China Digital TV Holding are Motley Fool Rule Breakers selections. The Fool owns shares of China Mobile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Longtime Fool contributor Rick Munarriz speaks two languages fluently, neither of them Mandarin. He does not own shares in any of the stocks in this article, except for Xiniya and Country Style Cooking. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.