Communist Leadership: We Must Slash Taxes

Liu Shan says the latest Politburo meeting, at which the leadership said more tax cuts are needed, delivered 9 signals.

1. The economy is slowing

The economy will not hit bottom in Q2 and if no new policies are launched, the growth rate for the full year will fall below the "psychological limit." Growth of 7% is the public number, 6.8% is the real number below which government goals will be threatened. However, new industries and rebalancing are laying groundwork for future growth.

2. Stable development

The government wants to combat risks in the economy to ensure stable growth. As Liu Shan puts it, this means the government may use some of its "old methods" to boost growth in the short-term. See 3, 4 and 6.

3. Stimulate real estate and improve market environment

4. Increase infrastructure/fixed asset investment

5. Cut taxes

6. Ease monetary policy

7. Stock market still plays a role in reform

8. Bottom line: protect against risk and do not allow defaults

on the one hand want to avoid an economic downturn that leads to debt risk, on the other hand also worried about an inflating stock market bubble, leading to systemic market risk

To deal with the risks, further deleverage the stock market; prevent defaults in the shadow banking and financial market

9. Merge Beijing-Tianjin-Hebei

This meeting laid out the plan for merging the three areas into a single economic zone.

iFeng: 第71期:政治局会议释放九大信号

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