China to resort to moderate fiscal stimuli to support slowing growth – Deutsche Bank

Analysts at Deutsche Bank note that the early headlines (per Bloomberg) from China’s National People’s Congress are suggesting that China will resort to moderate fiscal stimuli to support slowing growth.

Key Quotes

“China announced a fiscal deficit target of 2.8% of GDP in 2019 versus 2.6% in 2018 while pledging a “noticeable decrease” in the tax burdens for major industries.”

“Premier Li Keqiang’s annual work report announced total tax and social security fees cuts of CNY 2tn ($ 298bn). China is now targeting GDP growth in the range of 6%-6.5% in 2019 (vs. last year's goal of c. 6.5%), marking a shift from previous practice of using a point figure. The work report also indicated that further cuts to the required reserves ratio for smaller banks are planned. At first glance much of the above has been expected so no major surprises here.”