In a fantastically renewed effort, the Chinese government is turning once again towards capitalism in order to boost economic growth. According to the article, the Chinese government "cut taxes on personal incomes and corporate profits. Authorities ordered banks to lend more to small businesses. And planners cranked up the infrastructure machine again." While this would indicate strong government interference in the economy, a major stimulus package is apparently off the table while the fear of debt is still strong.
The article cites two particular reasons for all of this growth-oriented action. The first is the trade war with the States. After appearing "to be on the back foot last year as its stockmarket tumbled," China has seen the positive aspect of being in a strong negotiating position. The second is the 70th anniversary of Communist Party rule (October 1st). On a day which should be for reminding the Chinese people of how great communism is, the Chinese government does not want the day "marred by grumbles about the economy."
Article: https://www.economist.com/finance-and-economics/2019/04/17/chinas-growth-is-set-to-perk-up-after-a-decade-low
1 comment:
Both lowering the tax burden on personal and corporate tax along with increased bank loans should lead to economic growth for China due to an increase in private investment. After hitting a decade low in real economic growth it makes sense as to why the Chinese government would take these actions. Hopefully their plan works and the Chinese economy can rebound as they play a significant role in the global economy.
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