China lowered its goal for economic growth and announced a major tax cut, as policymakers grapple with a debt legacy and the trade standoff with the U.S.
The gross domestic product growth target released Tuesday morning in Premier Li Keqiang’s annual work report to the National People’s Congress was set at a range of 6 to 6.5% for 2019. The shift to a band from the previous practice of using a point figure gives policy makers room for maneuver and compares with last year’s “about” 6.5% goal.
Economists surveyed by Bloomberg see output growth slowing to 6.2% this year from 6.6% in 2018, before easing further in 2020 and 2021. The report pledged to keep China’s leverage ratio “basically stable” in 2019. Policy makers are trying to rekindle lending to the private sector while avoiding an accelerated run up in debt, with the total debt pile now approaching 300% of GDP.
The target budget deficit for 2019 was set at 2.8% of GDP, versus last year’s goal of 2.6%. The report pledged a “noticeable decrease” in the tax burdens of major industries, with the total of reductions in tax and social security fees coming to 2 trillion yuan.
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