MNI: China to Slash Taxes, Raise Local Gov Debt to Spur Growth

     BEIJING (MNI) - China, faced with increasing economic headwinds, will

broadly cut taxes and fees, allow local governments to issue more bonds,

continue pursuing proactive fiscal policy as well as prudent monetary policy

next year, Xinhua Hua News agency said Friday following the Central Economic

Work Conference in Beijing this week. 

     Here are the key takeaways:

     - In a rare admission, policymakers officially recognized the threat of the

trade war. China will "steadily and appropriately deal with China-U.S. economic

and trade friction," implement the Xi-Trump consensus reached in Argentina and

promote negotiations with the U.S.

     - Macroeconomic policies should strengthen countercyclical regulations.

Will insist structural deleveraging and deal with local government debt risk at

stable and appropriate pace.

     - Prudent monetary policy should be either too tight or too loosen, so as

to maintain a reasonable and sufficient liquidity. The line removed a previous

"neutral", and instead replaced with a clear and strong easing signal.

     - Will continue building healthy and long-term housing market. This shows

that the government won't rely on easing controls on the property market to

boost growth; the current restrictions on the property market will stay.

     - Increase the proportion of direct financing, direct liquidity into the

real economy, and ease the financing difficulties of private and small

enterprises. Once again policymakers are recognizing the danger of a weakening

private sector.

     - Will deepen reform of SOEs, fiscal and financial, land, market access and

social governance.

     - Will promote development of high-quality manufacturing, remove zombie

firms, increase domestic consumption by stimulating service sectors including

education, health care and culture, increasing investments in the

commercialization of 5G, artificial intelligence, Internet of Things as well as

infrastructure investment.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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