China - A Critical Global Growth Engine, Despite Deceleration

Dan Steinbock profile picture
Dan Steinbock


  • Premier Li Keqian's annual work report, released on Monday, sets the general tone for the 2019 economic policies.
  • Despite U.S. trade wars, China will stick to its growth target and fiscal easing in the short-term, deleveraging in the medium-term and rebalancing in the long-term.
  • Despite deceleration, the size of Chinese economy has tripled in just a decade.

Despite U.S. trade wars, China will stick to its growth target and fiscal easing in the short-term, deleveraging in the medium-term and rebalancing in the long-term. That's the message of Premier Li's report. Released on Monday at the annual session of the National People's Congress (NPC), Premier Li Keqian's annual work report sets the general tone for the 2019 economic policies.

In 2019, China has set a lower, flexible economic growth target at the range of 6.0% to 6.5%, while raising its tolerance of fiscal deficit at 2.8% of GDP. The point about the GDP growth target is not how much it will exceed 6%, but that it should not fall below that level. That's vital to sustain the quest to double living standard by 2020.

Tax cuts, 11 million new urban jobs China is focused on raising per capita incomes, eradicating remaining poverty and battling climate change. Beijing is planning to cut $300 billion in taxes and corporate pension payments, especially to ease the burden on small-and-medium size (SME) enterprises. The idea is also to cut the value-added tax rate that covers the manufacturing sector by 3 percentage points.

In this policy mix, the focus is on cutting banks' reserve requirement ratios, instead of lowering interest rates, and guiding liquidity into SMEs. That supports the aim to create over 11 million new urban jobs. Still, skeptical observers note that the purchasing managers index (PMI) came in at 49.2 in February representing the worst performance in three years. But the PMI data should be seen in historical context. A decade ago, when Chinese growth still relied mainly on manufacturing exports, PMI data reflected economic realities directly. As China is rebalancing away from manufacturing exports, PMI offers a less accurate picture of the full economy.

Indeed, the new Caixin PMI - which focuses on

This article was written by

Dan Steinbock profile picture
Dr Dan Steinbock is an internationally recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among the major advanced economies (G7) and large emerging economies (BRICS and beyond). He has consulted for international organizations, government agencies, financial institutions, multinational corporations and SMEs, competitiveness institutes and NGOs. His multipolar advisory and consulting activities include strategic services, policy briefs and guidance, risk management, scenario analysis, economic briefings, competitiveness and innovation analysis, trade and investment assessments – as well as multipolar corporate training and speaking engagements. In addition to his advisory activities (, he cooperates with major US universities (Stern School of Business/NYU, Columbia University, Harvard Business School and Prof Michael E. Porter’s international cluster affiliates) as well as international think-tanks, incl. India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore). He is a Senior Fulbright Scholar. His commentaries are released in major outlets in a dozen nations across all world regions, from the United States and Europe to China and India. He divides his time between New York City, Shanghai, occasionally Europe and often traveling, especially in Asia.

Recommended For You

Comments (3)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.