Burton Mills - China to Use Tax Cuts to Support Economy

Burton Mills - China will use large scale tax cuts and higher public expenditure to support the cooling economy.

China has announced its intention to roll out a series of tax cuts for small businesses in an effort to support business activity as the economy slows.

Chinese government officials said that they would implement tax reductions on a wider scale after recent gloomy industrial growth data pointed to a weakening economy as the trade war with the US bites.

Analysts at Taipei, Taiwan based investment house Burton Mills say sales of automotive vehicles in China declined for the first time in almost 30 years and that recent official data revealed that exports had fallen by the most in more than 2 years in December last year. Imports also fell as domestic demand weakened.

With international investors growing increasingly concerned about the state of China’s economic outlook, in addition to the large scale tax cuts for small businesses, the Chinese government is resorting to further stimulus measures - the details of which have yet to be revealed – to try and soothe investor worries.

Burton Mills analysts say growth in the world’s second largest economy will likely slow this year and China is expected to announce that it has reduced its growth target to 6-6.5% for 2019 at its yearly parliamentary meeting later this year.

With all signs pointing to a significant economic slowdown, China’s government seems determined to implement measures to support the economy without relying on credit that could add to its debt problem.

Source: Burton Mills