Prospects for the 2019 NPC and CPPCC sessions: stabilizing the economy and promoting reform
On March 3, the Prime Minister will make a report on the work of the government, announce the economic and social development goals for 2019, and determine the direction of fiscal and monetary policies. It is expected that this year we will continue to implement the policy of Macro-environmental stabilization will create favorable conditions for deepening reform. Reforms in finance, taxation, finance and state-owned enterprises will be further implemented.
Maintain economic operation in a reasonable range, and continue to implement the policy of & ldquo; Six Steady & rdquo. According to the local government work report, 23 provinces and autonomous regions have lowered their growth targets, and the median growth target of each province in 2019 is 0.25 percentage points lower than that in 2018. The national economic growth target may also be reduced from 6.5% in 2018 to 6.5%. We expect real GDP to grow at 6.4% in 2019, which is expected to be close to the top of the growth target range. It is expected that this year's government work will continue to adhere to the general tone of steady and progressive work, and implement the policies of & ldquo; six stable & rdquo; and maintain the economic operation in a reasonable range.
Fiscal policy will increase the budget deficit rate, substantially increase the issuance of local government special bonds, and implement larger tax and fee reduction measures. The budget deficit rate in 2019 is expected to increase from 2.6% in 2018, but will not exceed 3%. In addition to the general budget deficit, the issuance of local government special bonds to cover the government-funded deficit will increase substantially, possibly from 135 trillion yuan in 2018 to more than 2 trillion yuan. Considering the general public budget and government funds, the broad budget deficit rate is expected to increase by more than one percentage point over last year. In terms of tax reduction, the new Personal Income Tax Law will be implemented on January 1 this year. After adding six special additional deductions, residents'tax burden will be significantly reduced. This year, we will implement larger tax and fee reduction measures: the highest value-added tax rate is expected to be reduced by 2 percentage points, and the enterprise income tax rate is also likely to be reduced.
Monetary policy will maintain a reasonable abundance of liquidity and a reasonable and stable level of market interest rates. The growth rate of total social financing in 2018 is greatly affected by the contraction of off-balance-sheet financing. The contraction of non-standard financing in 2019 may be reduced, which is conducive to the steady recovery of the growth rate of total social financing. Since the end of last year, the pressure of RMB depreciation has eased, the total amount of credit and social financing increased strongly in January, and the financial conditions have improved significantly. In the short term, the necessity and possibility of further interest rate reduction by the central bank will decrease. The strength and duration of this round of credit recovery may not be as strong as 2008-2009 and 2016-2017, but monetary policy will still maintain the basic stability of interbank market interest rates.
Macro-environment stabilization creates favorable conditions for deepening reform. Since the second half of last year, counter-cyclical adjustment has achieved some results. The economic growth has begun to stabilize, downside risks have been alleviated, and favorable conditions have been created for further promoting various reforms. In the reform of fiscal and taxation system, we will speed up the establishment of a modern financial system, improve the financial relationship between the central and local governments, and improve the tax system. In terms of financial reform, we will improve the multi-level capital market system, increase the proportion of direct financing, promote equity financing, enhance the economic capacity of financial service entities, and further prevent and resolve financial risks. In the reform of state-owned enterprises, we will actively promote the reform of mixed ownership, introduce competition and enhance the vitality of the state-owned economy. Sino-US economic and trade negotiations are moving in a positive direction, and the two sides are expected to reach an agreement in the near future. It is expected that China will continue to open up to the outside world, relax market access, further reduce tariffs and actively expand imports.
