China gave its lowest ever estimate for GDP growth. Meanwhile, U. S. companies earning less from China business.
Chinese President Xi Jinping (left) and Chinese Premier Li Keqiang arrived at the opening session of China’s National People’s Congress at the Great Hall of the People in Beijing, on March 5,2019. China’s government announced a lower growth target of 6%. (AP Photo/Andy Wong)
Beijing’s movers and shakers are meeting for the so-called “two sessions” this week, where they will discuss things like trade wars and economic development. The first order of business for the market: a new GDP target range that puts guidance as low as 6% to as high as 6.5%.
China is officially slowing. The 6% target is the lowest target set since the Great Recession of 2009. U. S. companies based there say they are expecting lower profits this year as a result of changing economic dynamics in the world’s No. 2 economy.
The high-end target of 6.5% GDP growth suggests Beijing has no plan for a 2009-style stimulus package, either. Investors have been daring China to increase stimulus, driving up mainland equity prices since the start of the year.
Premier Li Keqiang delivered his GDP target to the National Party Congress in Beijing on Tuesday.
More stimulus is coming, even if it is not the kind of bridges-to-nowhere and shadow banking stimulus that propped up Chinese markets for over a decade. Xi Jinping appears to have no appetite for leverage.
Some of the newest fiscal stimulus measures include lower taxes and corporate pension payments getting cut by nearly 2 trillion yuan. The manufacturing sector will see their Value-Added Tax (VAT) rate go to 13% from 16%. And on the trade war front, there is a proposal that would give foreign entities the same rights as domestic entities when doing business in China. Chalk that up as a quiet win for the Americans in the ongoing trade spat between the two sides.
See: Will Trump Sign A “Paper Tiger” Trade Deal With China? — Forbes
American Companies Still Love China (Sort Of) — Forbes
Chinese officials meet all week to discuss new policies and economic goals. (AP Photo/Andy Wong)
China’s New GDP Target Gives Government Leeway For Growth — South China Morning Post
China’s economy has been showing signs of a slowdown for years. U. S. companies are no longer seeing the big profits from China compared with the rest of the world.
