This issue provides an overview of the macroeconomic trends in Q3 2019, some policy updates and hot topic analysis.
Here are some highlights of the macro economic and policy updates:
Aggregate financing continued to grow in double-digits.
According to data from the People’s Bank of China, in the first nine months, aggregate financing to the real economy (AFRE) was 18.74 trillion yuan or 3.28 trillion more than the same period last year, while in Q2 AFRE was 13.23 trillion yuan.
Fiscal spending went up by 9.4% in Q3, although the general public budget revenue increased by 3.3%.
In the first nine months, the general public budget revenue increased by only 3.3% to 15.07 trillion yuan (3.4% in Q2). This is similar to Q2 and was caused by the policy measures of cutting taxes and fees.
China has made dramatic improvements in the business climate.
Following the significant improvement in the business climate ranking last year, rising from 78th to 46th, China has made great progress again.
According to the recently released annual report by the World Bank titled Doing Business 2020, with an enhanced score of 77.9 out of 100, China now ranks 31st globally in terms of the ease of doing business after implementing eight business reforms during the year. The country is also one of the world’s top ten most improved economies for the second year.
Hot topic analysis: Will China face slower growth in 2020 and beyond?
As a result of global economic slowdown and weakening domestic demand, China’s GDP growth rate reduced to 6% in the third quarter of this year, which is the lowest rate in 27 years or since 1992. Market is worried that the world’s second largest economy might continue to decelerate, particularly as China has contributed more than 30% to global growth in recent years. So, will China face slower growth in 2020 and beyond? If so, how should the country deal with this?
China Tax Leader, Central China Markets Leader, Shanghai Office Lead Partner, PwC China
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