- China Cuts Growth Projection for 2019
China lowered economic growth projection for 2019 and announced tax cut as policymakers look to cushion the economy amid rising debt.
Premier Li Keqiang, in its annual work report to the National People’s Congress on Tuesday, set gross domestic product at a range of 6 to 6.5 per cent for 2019. A shift from the previous point figure will give policymakers room to adjust, unlike last year’s 6.5 per cent target.
The lower bound of the GDP target would be the slowest rate of growth in three decades, a result of China’s economic deceleration as lawmakers struggle to reduce rising debt, fix the environment and alleviate poverty.
Analysts see the economy slowing to 6.2 per cent in 2019, down from 6.6 per cent recorded in 2018 and ease even further in 2020 and 2021.
While the report promised to keep leverage ratio stable in 2019, lawmakers will be faced with one question ‘how to lend to the private sector without escalating rising debt that is already 300 per cent of the GDP.’
A 3 percentage points tax cut was announced in a move to boost manufacturing activity as published yesterday. The plan could boost growth by 0.6 per cent or $90 billion.
Also, the ongoing trade negotiation between the U.S. and China is expected to boost growth if all goes well as widely reported by media.