This issue provides an overview of the macroeconomic trends in Q2/Q3 2020, some policy updates and hot topic analysis.
Here are some macro-economic highlights:
Total aggregate financing to the real economy substantially increased
In order to support domestic economic growth, according to data from the People's Bank of China (PBoC), total aggregate financing to the real economy (AFRE) reached 20.83 trillion yuan during H1 which was 6.22 trillion yuan more than the same period last year. Total RMB loans to the real economy increased by 2.31 trillion yuan and reached 12.33 trillion yuan, the highest on record.
Fiscal spending decreased by 5.8% to 11.64 trillion yuan
As a result of the negative impact of the COVID-19 pandemic on GDP growth, and the measures to cut taxes and fees for enterprises, China’s general public budget revenue reduced by 10.8% in the first two quarters year-on-year, which is much less than the 14.3% drop in Q1 due to economic recovery in Q2. Budget revenue growth will probably remain positive in H2 as economic conditions are expected to improve.
On 14 July, China’s National Development and Reform Commission (NDRC) together with 12 central government departments, released a guideline to support the digital economy, which has emerged as one of the key forces driving China’s economic development in the past few years. Particularly amidst COVID-19, the digital economy played an essential role during city-wide lockdowns. So, what is the definition and scope of the digital economy? How has the digital economy impacted China’s GDP growth in the past few years? How have different sectors of digital economy performed during COVID-19? Where will digital economy go post-pandemic?
China Tax Leader, Central China Markets Leader, Shanghai Office Lead Partner, PwC China
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