CX Daily: China's Big Tax Cuts Bring Big Savings
China tax cuts bring big savings for consumers and businesses
China’s government cut more than 1.5 trillion yuan ($213.1 billion) in taxes during the first three quarters including substantial reductions in VAT and individual income tax, officials said.
The government reduced the tax burden of businesses by 703.5 billion yuan in the period through VAT reform, said Cai Zili, a deputy director of the office responsible for tax cuts at the State Taxation Administration, during a Wednesday press conference. Individuals have paid 442.6 billion yuan less thanks to the tax reduction policy, while small businesses got preferential cuts of 182.7 billion yuan.
In addition, the government also lowered fees — mostly on corporations — totaling 272.5 billion yuan, Cai said. The two main beneficiaries of VAT reductions were manufacturers and the wholesale and retail sector. Manufacturers paid 473.8 billion yuan less in duties, accounting for 31.4% of total VAT reductions. Wholesalers and retailers coughed up 325.8 billion yuan less, equivalent to 21.6% of the cuts.
FINANCE & ECONOMICS
Hong Kong sinks into recession as unrest takes a toll
Hong Kong officially slipped into a recession as the city’s economy continued to deteriorate in the third quarter, according to official data released Thursday.
Hong Kong’s Q3 GDP shrank 3.2% from the previous quarter, marking the second straight quarter of decline, according to advanced estimates released by the local government. That indicated the city’s economy technically entered a recession, which is typically defined as two consecutive quarters of quarter-on-quarter economic contraction. Hong Kong’s economy dropped 2.9% YOY, marking the first quarterly decrease in a decade.
Trade war /
China envisions ‘shared factories’ in achieving ‘Made in China 2025’
China may be turning factories into a shared resource as it pursues advanced manufacturing goals in line with its controversial “Made in China 2025” industrial policy. The Ministry of Industry and Information Technology (MIIT) issued a directive calling for “shared manufacturing,” where the sharing economy model would be applied to assembly lines to optimize resource allocation and raise production efficiency.
By 2022, China should have 20 shared manufacturing “demonstration platforms” and 50 pilot projects, according to ministry targets. By 2025, it wants the shared model to be widely applied. Though the guidelines don’t name “Made in China 2025,” it is an implementation of strategies from China’s Central Party Committee and State Council, the ministry said.
In depth /
Why China is still hooked on U.S. soybeans
From upping soybean imports from Brazil and nearby countries to buying soy-based animal feed to the detriment of its own crushing industry to scrapping controls on shipments from Russia and trying to boost domestic yields, China has done nearly everything imaginable to satisfy its own needs while continuing to wield restrictions on U.S. imports as a trade war weapon. But there is no silver bullet.
In China, land is limited and expensive, and soy production takes a back seat to staple foods (rice, corn and wheat) to feed its massive population. Russia's environmental protection policies, surprisingly, also pose a barrier: The government has strict rules on pesticides and fertilizers on cultivated land and insists on fallow crop rotation. Brazil, whose 2018 soybean shipments to China accounted for 82% of its total exports of the legume, will also not meet the country's demand should U.S. imports fail to return to pre-trade war levels. China is hooked.
China’s biggest banks prepare for hard times
China’s largest banks eked out higher profits but signaled tougher times ahead, shedding bad loans and boosting provisions as the economy shows signs of deterioration.
Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of China Ltd. and China Construction Bank Corp. reported declines in their nonperforming loan ratios in the third quarter while strengthening buffers against souring debts. China cleaned up 1.4 trillion yuan ($198 billion) of nonperforming loans in the first nine months, nearly 177 billion yuan more than in the same period last year, Huang Hong, vice chairman of the China Banking and Insurance Regulatory Commission said last week.
Rate cut /
Hong Kong banks cut prime lending rates for first time in 11 years
Hong Kong’s monetary authority cut its base lending rate by a quarter percentage point to 2%, matching the overnight reduction of the same amount by the U.S. Federal Reserve and prompting major banks to reduce their rates for the first time in 11 years.
The move could ease businesses’ financing costs as Hong Kong has officially slipped into a recession. The city’s battered property market is also expected to get a boost from lower mortgage rates.
HSBC Holdings PLC, Hang Seng Bank and Bank of China (Hong Kong) said Thursday they would cut their prime lending rates by 12.5 basis points, or an eighth of a percentage point, to 5%. A basis point is a hundredth of a percentage point. China Citic Bank International, Standard Charted Bank and Bank of East Asia said they will cut their rates to 5.25% from 5.375%.
Quick hits /
10 Years of Caixin: Star Chinese fund manager arrested after 2015 market rout
Opinion: Forget Chile — what matters is trade deal text, not venue
Ling Huawei: Regulating financial innovation begins with oversight of big data
BUSINESS & TECH
Major wireless carriers launch 5G services
China Mobile, China Unicom and China Telecom, the country's three major state-owned wireless network operators, all announced their consumer 5G packages at a Beijing industry event, adding separately that they launched 5G in 50 cities.
In press releases, the companies said that prices range from 128 yuan ($18.10) to 599 yuan, depending on the amount of monthly data included and the speed of the package. The smallest packages are 30 gigabytes (GB) per month, and the largest reach 300 GB. Costs of 4G packages usually range from 58 yuan to 88 yuan a month.
Rising sea levels threaten three times more people in China than previously thought, study finds
Sea-level rises associated with greenhouse gas emissions from human activity could affect 93 million people on the Chinese mainland by 2050 — three times more than previously thought — according to a new study.
By midcentury, land currently home to 93 million people in China, such as highly urbanized coastal areas like Shanghai, Tianjin and the Pearl River Delta, could be lower than the height of the local average annual coastal flood, according to a study published in the British peer-reviewed journal Nature Communications.
High iron ore prices erode steelmaker profits
Chinese steelmaker profits plunged in the third quarter, hit by soaring costs of iron ore due to falling global supplies of the main ingredient used in steelmaking.
Combined profits of the more than 350 members of the China Iron & Steel Association fell 32% to 1.4 trillion yuan during the first three quarters this year, the industry group said Tuesday at a press conference in Beijing. The companies’ third-quarter profits fell nearly 40% to 401 billion yuan, according to our calculations.
China solar power dims under reduced state support
The addition of solar power to China’s grid plunged 54% in the first nine months of the year compared with a year earlier, as developers cooled to the renewable energy source under a strict, less lucrative new program that’s part of Beijing’s plan to wean the sector from state support.
Installation of new solar energy totaled 16 gigawatts (GW) in the nine months through September, including just 4.6 GW installed in the third quarter, according to data released Tuesday by the National Energy Administration (NEA). In July the NEA forecast that new solar power installation in China would reach 40 GW to 45 GW this year.
Quick hits /
China’s electric-vehicle manufacturers fight for their lives after subsidies slashed
China emerging as key driver for Tesla’s global sales
Home-appliance giants post growth despite economic slowdown
Alibaba weighs November Window for $10 billion listing
Hillhouse to focus on Gree after adjusting holding in air conditioning rival Midea
Qihoo’s new anti-spycam feature targets peeping toms
Work on L.A.’s $1 billion trophy tower halted as China pulls back
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