A major tax cut to consumers and corporates is coming in 2019.
40-year anniversary of reform and opening-up marks reform path.
US-China trade deal to be 'enforceable and verifiable'.
Major tax cuts coming in response to economic weakness
It is increasingly clear that China is preparing for a major tax cut in 2019 . A China Daily article this week with the title ' Major tax cuts are on the horizon ' speaks of a tax cut for households and corporates of more than 1% of GDP. On Tuesday, the annual Central Economic Work Conference will lay out economic policies for the coming year. An announcement on tax cuts and possibly new reform measures could come on the back of it.
In a further effort to support for the private sector, on Tuesday the central bank, the People's Bank of China, announced a new facility to provide cheap medium-term funding for banks lending to smaller businesses. The rate will be 3.15% of loans up to three years to banks that support the real economy. It compares with a rate of 3.5% on a one-year money market rate. The private sector is smarting from a crunch in shadow finance, which needs to be filled by the banks (see chart).
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