China's State Council, or cabinet, on Wednesday said it will cut value-added tax (VAT) and corporate tax in a bid to stimulate the economy and facilitate investment in small companies.

Tax cuts will help "consolidate a steadying and improving trend of the economy and promote structural upgrading," the cabinet said after a meeting led by Premier Li Keqiang.

On Monday, China reported a 6.9-percent GDP growth rate in Q1, the strongest economic growth since 2015, as higher government infrastructure spending and a property boom helped boost industrial output.  

Spending by the central and local governments rose 21 percent from a year earlier.

That helped goose the pace of growth in the first quarter well above the government's 2017 target of around 6.5 percent.

Among six measures promised by the State Council, the government will simplify the value-added tax rate system and cut value-added tax for agricultural products and natural gas to 11 percent from 13 percent, effective from July 1, 2017.

The cabinet also said the government will widen income tax benefits for small and micro firms.

Small firms with annual income of 500,000 yuan (about 72,600 US dollars) or less can now be taxed on half that amount, at a rate of 20 percent, it added. The change is effective from January 1 this year until the end of 2019. The earlier income threshold was 300,000 yuan.

Other measures included further pre-tax deductions for innovation-based tech companies and pre-tax deduction of commercial health insurance.

These changes will save companies more than 380 billion yuan in 2017.

In the annual government work report, Li Keqiang promised to cut corporate taxes and business fees by around 350 billion yuan and around 200 billion yuan respectively this year.