Christin Tuxen, chief analyst at Danske Bank, suggests that China is preparing for a continued slowdown in growth as ahead of the National People’s Congress, Chinese premier Li made a series of announcements overnight.
Key Quotes
“First, the Chinese authorities released new GDP growth targets, which were lowered to the 6.0-6.5% range for 2019 (vs 6.5% for 2018), i.e. accommodating a continued deceleration in growth. At the same time, it was also underlined that ‘prudent’ monetary policy and ‘proactive, stronger, and more effective ‘fiscal policy will be pursued going forward with a target budget deficit of 2.8% of GDP (vs 2.6% last year).”
“Further, VAT cuts were announced and significant tax relief was pledged for the industrial sector with tax and social security fees set to be reduced by CNY2tr.”
“On the whole, this suggests that China is preparing for a continued slowdown in growth, but also that the Chinese authorities remain ready to stimulate to avoid a hard landing, even with a trade deal in sight.”
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