China recently lowered its economic growth target and announced a major tax cut, as policymakers seek to pull off a gradual deceleration while facing a debt legacy and the trade war with the United States. Premier Li Keqiang’s annual work report to the National People’s Congress set the gross domestic product (GDP) growth target at 6-6.5 per cent range for 2019.
Earlier a decimal figure used to be the target while this year a band has been fixed.
The lower bound of the target would be the slowest pace of economic growth in almost three decades.
The report pledged to keep China’s leverage ratio ‘basically stable’ in 2019, according to global news wires.
A cut of 3 percentage points to the top bracket of value added tax was announced in a move aimed at benefiting the manufacturing sector.
The target budget deficit for 2019 was set at 2.8 per cent of GDP compared to 2.6 per cent last year.
Monetary policy will remain ‘prudent’, while fiscal policy will be ‘proactive, stronger, and more effective’, the report added.