China Vows Tax Cuts on Larger Scale to Shore Up Sagging Economy

(Bloomberg) — China will cut taxes “on a larger scale” to help support its slowing economy, according to senior economic policy officials.

• The government will continue to cut taxes, especially for small businesses and the manufacturing sector, according to a statement distributed to reporters before a press conference with Zhu Hexin, deputy governor of the People’s Bank of China, Xu Hongcai, deputy minister of the Ministry of Finance and Lian Weiliang, deputy chairman of the National Development and Reform Commission on Tuesday.

Key Insights

• China confirmed more supportive measures coming in 2019 to stabilize the economy, according to agreements reached by top leadership at a economic work conference last month
• There’s little sign that the incremental stimulus so far has turned around sentiment in the real economy, which could register the slowest growth in nearly three decades in data scheduled for release next week
• China’s new yuan loans in 2018 increased 2.64 trillion yuan from the previous year to 16.17 trillion yuan, according to a statement by the PBOC before the press conference, signaling that December lending exceeded most economist estimates
• China’s loans to small and medium-sized enterprises rose 17.1 percent in the Jan-Nov period over a year ago, according to the PBOC statement
• China to take measures to stabilize auto consumption, according to a statement by the NDRC before the press conference
• China to increase issuance of local government special bonds, according to a separate statement by the Ministry of Finance at the press conference

Get More

• China’s economy challenged with deepening slowdown from slumping exports, falling prices, sluggish credit growth

To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at [email protected];Heng Xie in Beijing at [email protected];James Mayger in Beijing at [email protected]

To contact the editors responsible for this story: Jeffrey Black at [email protected], Sharon Chen

©2019 Bloomberg L.P.

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