China cuts taxes, sees 'tough struggle' as growth slows

The Chinese army

The Chinese army

China a year ago cut taxes and fees worth 1.3 trillion yuan and allowed local governments to issue 1.35 trillion yuan in special bonds to fund key projects.

China's economy outperformed the official 2018 goal of "around 6.5 percent" by expanding 6.6 percent.

China's benchmark, the Shanghai Composite Index, gained about 0.9%; Japan's Nikkei fell 0.4%; and the Hang Seng in Hong Kong was flat.

Proposed tax cuts of up to 2 trillion yuan ($300 billion) would put "significant spending power" in the hands of consumers and companies and help to buoy sagging demand for autos, household appliances and other goods, said Mr. Varathan.

According to the plan, Chinese inflation will accelerate to about 3 percent this year from 2.1 percent in 2018.

Trade tensions with the USA escalated past year after President Donald Trump announced additional tariffs on $250 billion worth of goods from China, and Beijing countered with its own duties on $110 billion worth of US goods.

In an apparent nod to the United States, with which China has been talking to strike a trade deal, Li emphasized that Beijing will proceed with its "reform and opening-up" policy, created to develop a market economy under the ruling Communist Party.

Chinese President Xi Jinping (left) and Premier Li Keqiang arrive for the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, March 5, 2019.

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The previous economic-growth target of 6.5% annually will now be replaced by an ambition to grow China's GDP by 6% to 6.5% a year.

In a bid to defuse USA and European trade complaints, Premier Li Keqiang pledged in a speech at the opening of China's national legislative session that foreign and local companies will be "treated as equals". At the same time, it will cut social security fees paid by companies.

China has set its GDP growth target at 6-6.5 percent for 2019, according to a government work report available to the news media ahead of the annual legislative session on Tuesday.

Smaller firms can expect to have easier access to funds as the premier said that China aims to increase lending to them by large commercial banks by more than 30% this year.

"China has long maintained its military is for the defense of its borders but that definition has broadened over the years", Roggeveen said. This year, Li also did not announce any targets for growth in retail sales or fixed asset investment. USA trade negotiators have also demanded that China buy more of America's products.

Addressing one of the biggest challenges China's economy faces, the government's work report to parliament said it would continue to promote Sino-U.S. trade negotiations and was committed to safeguarding economic globalization and free trade.

Separately, China's top banking regulator said on Tuesday Beijing could "absolutely" reach an agreement with the United States on opening up its financial sector.

US Secretary of State Mike Pompeo said he thought both nations were "on the cusp" of a deal to end their trade war.

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