China cuts taxes to protect its economy from the trade war

[dineshb316]

https://money.cnn.com/2018/07/24/news/economy/economy-of-china-stimulus/index.html

China is looking for new ways to pump up its slowing economy as a trade war with the United States escalates.
Beijing has announced a range of measures including tax cuts, infrastructure spending and new loans to business as its tries to reinvigorate economic growth, which has begun to slow in recent months.

The tax cuts for business are relatively small — worth about $10 billion — but they come on top of much bigger injections of funds into the banking system in recent weeks aimed at boosting activity.

The Chinese government said in a statement late Monday that the new stimulus was intended to help the country cope with "an uncertain external environment."

China has accused the United States of starting a trade war by imposing tariffs on billions of dollars of its exports. It has responded with tariffs of its own on American products, drawing threats from President Donald Trump of much bigger retaliation to come.

The world's second-biggest economy grew by 6.7% in the quarter ended June 30, its slowest rate of growth in almost two years.

While China should still meet its 2018 growth target of about 6.5%, the intensifying clash with the United States could hurt the economy in the second half of this year.

The Chinese government "is sending a clear signal that it is preparing to defend growth," said Raymond Yeung, an economist at investment bank ANZ.

News of the stimulus measures boosted Chinese stocks on Tuesday. The Shanghai Composite index closed up 1.6% and Hong Kong's Hang Seng gained 1.4%. Among the top gainers were construction and industrial companies, which could benefit from higher infrastructure spending.


Monday's announcement is the latest in a series of steps China has taken to try and perk up its economy.

Since June, the People's Bank of China has injected about $180 billion into the financial system by providing new loans and reducing the amount of deposits commercial lenders are required to hold.

Shifting policy

Analysts said the government's move on Monday showed it doesn't want the central bank to do all the heavy lifting.

It's worried about the effect of looser monetary policy on the Chinese currency. The yuan has already fallen to its lowest level in more than a year.

Trump has accused China of keeping the yuan artificially low to boost its huge export industry.

Ken Cheung, a currency strategist at investment bank Mizuho, said the Chinese government was trying to avoid measures that would cause the yuan to weaken too sharply.

The People's Bank of China "might refrain from scaling up its monetary easing further in the very near term to avoid excess yuan depreciation."

A falling yuan could help Chinese exporters but if the depreciation spirals out of control, it could shock financial markets in China and around the world.

Intensifying trade clash

The Trump administration and China this month imposed tariffs of 25% on $34 billion of each other's exports. US tariffs on an additional $16 billion of Chinese goods are coming soon.

Analysts have previously forecast that trade tensions could shave up to 0.5 percentage points off Chinese growth this year, depending on the intensity of tariffs.

Also weighing on growth are policies by the Chinese government designed to rein in the country's huge amount of corporate debt, which has snowballed since the global financial crisis.

Some analysts think things could get worse for China's economy before they get better.

"Despite the shift of Beijing's stance towards stimulus, we expect growth to weaken before staging a moderate rebound," said Nomura economist Ting Lu.



The US government also said last week it was readying new tariffs on Chinese goods worth an additional $200 billion, releasing a list including fruit and vegetables, handbags and baseball gloves.

[toyolink]

Unfortunately this trade war would result in significant damage to all parties.
Our particular circumstances suggest that there may be some direct fall-out.
The global economic blocks are presently being redefined and in many cases this is being done with the USA being left to stand alone.

[Duane 3NE 2NR]

Beijing has announced a range of measures including tax cuts, infrastructure spending and new loans to business as its tries to reinvigorate economic growth, which has begun to slow in recent months.

vs our method here in T&T

[maj. tom]

When the first PNM budget came out, it was pointed out adamantly in discussion here on the forum that extra taxation to force less spending by the population, and reducing Government spending does NOT revive an economy. On top of all the lies that "the treasury empty!" We should have done what China is doing now.

But that's PNM Imbert's school of economics. What a narcissist fool!

[Miktay]

Writers at CNN have a gross misunderstanding of the USA China trade really works....

[De Dragon]

Writers at CNN have a gross misunderstanding of the USA China trade really works....

Do tell, Alan Greenspan.

[RedVEVO]

Beijing has announced a range of measures including tax cuts, infrastructure spending and new loans to business as its tries to reinvigorate economic growth, which has begun to slow in recent months.

vs our method here in T&T

China is an exporter of goods .

China's goods are in demand .

They have the supply of goods.

You cut taxes as an incentive to exporters to continue exporting and bring in foreign exchange etc.

Trinidad is not so fortunate .

[sMASH]

Beijing has announced a range of measures including tax cuts, infrastructure spending and new loans to business as its tries to reinvigorate economic growth, which has begun to slow in recent months.

vs our method here in T&T

China is an exporter of goods .

China's goods are in demand .

They have the supply of goods.

You cut taxes as an incentive to exporters to continue exporting and bring in foreign exchange etc.

Trinidad is not so fortunate .

one padnah migrate to canada, the next brother making arrangements. a few former work colleagues went australia texas, arabian peninsula... keep thinking those tax hikes working.

[RedVEVO]

Writers at CNN have a gross misunderstanding of the USA China trade really works....

Do tell, Alan Greenspan.

Miktay is actually correct . CNN is very bias .

The USA has lost it's competitive advantage a long time ago .

China will adapt to anything that USA throws at it inclusive of trade tariffs .

[Miktay]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

[sMASH]

They aren't cashing on the debt... As soon as they reclaim it, it will appreciate.

[RedVEVO]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

[Miktay]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

[RedVEVO]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

[Miktay]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

[RedVEVO]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

Explain the data . Your view .
Data can be interpreted many ways .

[De Dragon]

China artificially devalues/manipulates their currency, and have been doing so for years.

[airuma]

Writers at CNN have a gross misunderstanding of the USA China trade really works....

I think this statement is a misunderstanding of the purpose of journalists.

[RedVEVO]

Writers at CNN have a gross misunderstanding of the USA China trade really works....

I think this statement is a misunderstanding of the purpose of journalists.

Trini journalists like conspiracy theories .

[Miktay]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

Explain the data . Your view .
Data can be interpreted many ways .

Who iz the #1 purchaser of US IOUs?

[RedVEVO]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

Explain the data . Your view .
Data can be interpreted many ways .

Who iz the #1 purchaser of US IOUs?

Cause they have the US dollars to purchase .

Did I not explain to you the export mechanism ?

Ok, have a good day !

[Miktay]

Inquiring minds may wonder....

USA has been running a trade deficit with China since the 1990s and which has accelerated from the 2000s to present day.

Why hasn't Chinese yuan appreciated more against USD?



https://tradingeconomics.com/china/balance-of-trade

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

Explain the data . Your view .
Data can be interpreted many ways .

Who iz the #1 purchaser of US IOUs?

Cause they have the US dollars to purchase .

Did I not explain to you the export mechanism ?

Ok, have a good day !

Most people don't fully understand the export mechanism.

Buying US debt keeps Yuan lower relative to USD and keeps the export game running.

[RedVEVO]

Lower your currency to encourage exports ..

If China's RMB appreciates .. China loses money (revenue)

In TT that does not work since we have nothing to export - other than oil & it's by products etc.

Correct. How does China do thiz?

China is not run my IMF or World Bank or EU or the White Man etc.

They just look @ exports and revenues and decide. They rule .

They are "socialist" or "communist" or "capitalist" - when they want to be

All of that may or may not be true. But itz beside the point.

Here's one of the reasons: http://ticdata.treasury.gov/Publish/mfh.txt

Explain the data . Your view .
Data can be interpreted many ways .

Who iz the #1 purchaser of US IOUs?

Cause they have the US dollars to purchase .

Did I not explain to you the export mechanism ?

Ok, have a good day !

Most people don't fully understand the export mechanism.

Buying US debt keeps Yuan lower relative to USD and keeps the export game running.

Very good !!!

Good talking to you .