2019 "Two Sessions" Look Ahead: Stabilize The Economy And Promote Reform

The two sessions will be held in March 3rd. In March 5th, the prime minister will make a report on the work of the government, announces the goals of economic and social development in 2019, and determines the direction of fiscal, monetary and other policies.

It is expected that this year will continue to implement the "six stability" policy, keep the economic operation in a reasonable range, increase the budget deficit rate by fiscal policy, substantially increase the scale of the issuance of special debt by local governments, implement a larger scale of tax reduction and reduction of fees, maintain a reasonable liquidity and a reasonable and stable market interest rate.

The macroeconomic environment will stabilize and create favorable conditions for deepening reform, and the reform of finance, taxation, finance and state-owned enterprises will be further implemented.

Keep the economy running in a reasonable range and continue to implement the policy of "six stability".

According to the government work report published by the local government, 23 provinces and autonomous regions have lowered their growth targets, and the average growth target 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 6-6.5%.

We expect the actual GDP growth in 2019 to be 6.4%, which is expected to approach the upper end of the growth target range.

It is expected that this year's government work will continue to adhere to the general keynote of steady progress, implement the "six stability" policy and keep the economic operation in a reasonable range.

Fiscal policy will raise the budget deficit rate, significantly increase the amount of local government bonds, and implement more large-scale tax reduction measures.

The budget deficit rate in 2019 is expected to increase by 2.6% compared to 2018, but it will not exceed 3%.

In addition to the general budget deficit, the amount of special debt issued by local governments to make up for the deficit of government funds will increase substantially, possibly from 1 trillion and 350 billion yuan in 2018 to more than 2 trillion yuan.

Considering the general public budget and the government fund, the generalized budget deficit rate is expected to increase by more than 1 percentage points over last year.

In terms of tax reduction, the new personal income tax law will be introduced in January 1st this year. After adding six additional deductions, the residents' tax burden will be significantly reduced.

A larger tax reduction measure will also be implemented this year: the highest value-added tax rate is expected to fall by 2 percentage points, and the corporate income tax rate may also be lowered.

Monetary policy will maintain a reasonable liquidity and a reasonable level of market interest rates.

In 2018, the total growth rate of social financing was significantly reduced by off balance sheet financing. In 2019, the intensity of non-standard financing contraction may be reduced, which is conducive to the steady growth of the total volume of social financing.

Since the end of last year, the devaluation pressure of RMB has eased. In January, the total volume of credit and social financing grew strongly, and the financial conditions improved significantly.

In the short term, the necessity and possibility of further reduction of interest rates by the central bank will be reduced.

The strength and duration of the current credit recovery may be less than 2008-2009 and 2016-2017 years, but monetary policy will still maintain the interbank market interest rate basically stable.

The macro environment stabilizes and creates favorable conditions for deepening reform.

Since the second half of last year, counter cyclical adjustment has achieved certain results, economic growth has begun to stabilize, and downside risks have eased, creating favorable conditions for further reform.

In terms of fiscal and taxation system reform, we will accelerate the establishment of a modern financial system, improve the 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, raise the proportion of direct financing, promote equity financing, enhance the financial services' real economic capacity, and further prevent and defuse financial risks.

On the reform of state-owned enterprises, we will actively promote the reform of mixed ownership, introduce competition and enhance the vitality of 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.

China is expected to continue opening wider to the outside world, relax market access, further reduce tariffs, and actively expand imports.