China Tax Reform & Stimulus Package
MAIN TAKEAWAY
China’s tax reform and stimulus package is not a policy-reverse of deleveraging campaign but a fine-tuning move to boost consumption, in line with the target to increase the contribution of consumption to GDP. It also aims to bolster infrastructure investment during the period where China tighten controls on local government borrowing which has slowed the government-driven sector.
To be sure, we don’t expect aggressive policy loosening is on the card given Beijing’s deleveraging pledge and fears of doing so will further hit the Chinese Yuan thus triggering more capital outflow. What we saw right now is that Beijing is walking on a tightrope to push ahead with deleveraging in the face of a trade war while maintaining decent growth with rounds of fiscal stimulus.
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Aug 6 2018, 06:54 PM
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