English   |   繁體中文   |   登录
稳健 创造持久财富

研究及评论

Chinese government steps up the effort to support growth - Takeaways of China's state council executive meeting

Chinese government steps up the effort to support growth - Takeaways of China’s state council executive meeting

On 23 July 2018, China’s state council executive meeting hosted by Premier Li Keqiang announced the fiscal and monetary policy will be further fine-tuned to boost domestic demand. And the meeting reiterated that China will strike a balance between “easing and tightening” and keep liquidity “reasonable and sufficient”. It was also stressed that China will not resort to outright stimulus.

Here are some key points to come out of the state council executive meeting:

More tax incentives to support technology upgrading:

  • On top of 1.1 trillion yuan of reductions in levies and fees in the pipeline of 2018, the State Council announced that it will further expand the promised R&D tax credit (75% of cost) from small to mediumsized companies to all companies, which will bring additional tax cut worth of 65 billion yuan.
  • The government requested to finish the refund of 113 billion yuan of the drawback of the withholding tax to the qualified enterprises in advanced manufacturing and modern service industry.
  • The state council also requested to accelerate the issuance of 1.35 trillion yuan of special local bonds and fund for the infrastructure projects.

Prudent monetary policy to keep sufficient liquidity:

  • It was stressed to keep the appropriate total social fund, “reasonable and sufficient” liquidity and smooth capital transition mechanism.
  • The government requested the implementation of the various incentives to small and micro enterprises (SMEs). It was instructed that the financial institutions to support SMEs and the initiative of debtto-equity swap by the specific funds with RRR reduction. China also encouraged the commercial bank to issue financial bonds for SME with the waiver of the requirement of consecutive profit of the issuer.
  • The meeting also set up the target to increase 140 billion yuan loan for around 150 thousand SME every year.

Faster investment growth:

  • The government boosted the private investment in the projects in transport, oil and gas, and telecommunications.
  • The statement also seeks to guide financial institutions to guarantee reasonable funding to Local Government Financing Vehicles so that essential projects aren’t held up, to facilitate construction and planning of a number of large scale projects that will meet development purposes and public demand.

Furthermore, it was also mentioned to clear “zombie enterprises” - companies that require government support in the form of subsidies and bank loans to operate - and related invalid capital.

In general, Chinese government stepped up the effort to support the growth, confirming from consolidation to a more neutral stance amid the economic headwinds. And it seemed like Chinese financial markets are recovering an appetite for risk not seen in months, taking cues from the government’s push to invigorate the economy. We have seen a 2.8% rally of S&P China 500 in first three days of the week.

Given the 726 billion yuan deficit in first half of 2018 versus around 2.38 trillion yuan as budgeted full-year deficit (2.6% of 2018 GDP), together with 5 trillion yuan in fiscal deposits and robust land sales revenue, there is still ample room for further fiscal easing.

As for the monetary policy, below-target inflation and a stabilizing debt mean that the government can afford to further lower the Required Rate of Return (RRR). This can increase lending funds to facilitate the corporate development. Market players expects additional cuts of RRR rate in the second half of 2018.

Source of all data: The state Council of The People’s Republic of China, 24 July 2018. http://www.gov.cn/xinwen/2018-07/24/content_5308679.htm

This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.

ICBCCS

The opinions expressed in this article are the author's own and do not necessarily reflect the view of WisdomTree.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. No warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, its officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. However, back tested performance is purely hypothetical and solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

INDEX PERFORMANCE DISCLOSURE

The S&P China 500 was launched on August 28, 2015. All information presented prior to an index’s Launch Date is hypothetical (back-tested), not actual performance. The back-test calculations are based on the same methodology that was in effect on the index Launch Date. Complete index methodology details are available at www.spdji.com. Please read S&P Dow Jones Indices LLC’s DISCLAIMERS.

DISCLAIMERS

The S&P China 500 Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by ICBC Credit Suisse Asset Management (International) Co., Ltd. (ICBCCSI), © 2016 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. S&P, SPDR and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”). DOW JONES is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks together with others have been licensed to S&P Dow Jones Indices LLC. Redistribution, reproduction and/or photocopying in whole or in part are prohibited without written permission. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates (collectively “S&P Dow Jones Indices”) do not have the necessary licenses. All information provided by S&P Dow Jones Indices is impersonal and not tailored to the needs of any person, entity or group of persons. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties. Past performance of an index is not a guarantee of future results. Neither S&P Dow Jones Indices LLC, Dow Jones, S&P, and their respective affiliates (“S&P Dow Jones Indices”) nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
In this document, ICBC Credit Suisse refers to ICBC Credit Suisse Asset Management Company Limited and its subsidiary, ICBC Credit Suisse Asset Management (International) Company Limited (“ICBCCSI”). ICBCCSI is a regulated entity under the Hong Kong Securities and Futures Commission.

No account has been taken of any person’s investment objectives, financial situation or particular needs when preparing this document. This is not an offer to buy or sell, or a solicitation or incitement of offer to buy or sell, any particular security, strategy, investment product or services nor does this constitute investment advice or recommendation.
The views and opinions expressed in this document, which are subject to change without notice, are those of S&P Dow Jones Indices LLC, ICBC Credit Suisse and/or its affiliated companies at the time of publication. While S&P Dow Jones Indices LLC, ICBC Credit Suisse and/or its affiliated companies (collectively as “we” or “us”) believe that the information is correct at the date of this presentation, no warranty of representation is given to this effect and no responsibility can be accepted by us to any intermediaries or end users for any action taken on the basis of this information. Some of the information contained herein including any expression of opinion or forecast has been obtained from or is based on sources believed by us to be reliable as at the date it is made, but is not guaranteed and we do not warrant nor do we accept liability as to adequacy, accuracy, reliability or completeness of such information. The information is given on the understanding that any person who acts upon it or otherwise changes his or her position in reliance thereon does so entirely at his or her own risk without liability on our part.
This material has not been reviewed by the Hong Kong Securities and Futures Commission. Issuer of this material: ICBC Credit Suisse Asset Management (International) Company Limited. This material shall be distributed in countries where it is permitted.

工银瑞信资产管理(国际)有限公司 京ICP备05063708号