Economics
China Is Hitting Reality Now on ‘Impossible’ Tax, Deficit Goals
- Tax revenues grow faster than economy amid pledges to cut them
- Rising expenditure demand raises bets on higher deficit in ’19
This article is for subscribers only.
China’s government is grappling with an inconvenient truth: you can’t cut taxes, boost spending and reduce the budget deficit all at the same time.
Having promised to do all three this year, a slowing economy coupled with the trade war with the U.S. is now underlining the contradiction in the government’s goals. Incomplete implementation of tax cuts and a rising social-security burden are also worsening the downward pressure on consumers’ spending power.