Advisor: China may not afford major tax cuts in 2021

Dhwani Mehta FXStreet

China may not be ready to impose major tax and fee cuts in 2021 as it needs to maintain a fiscal balance, Han Yongwen, a former official with the National Development and Reform Committee (NDRC) wrote in a blog post for China Bond.

Further comments

“About 60% of cities and 75% of counties across the country posted negative revenue growth in H1 2020 while spending is expected to rise.”

“China will have CNY2.7 trillion in debt maturing this year, up CNY600 million from 2020.”

“The rate of increase in the money supply has surpassed economic growth, though liquidity hasn't been efficiently used.”

Market reaction

USD/CNY was last seen changing hands at 6.4680, adding 0.21% on the day, courtesy of the bounce in the US dollar across the board.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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