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Economics

China Bets on $1.5 Trillion of Tax Cuts in Quest for Growth

As Beijing’s zeal for supply-side economics continues, critics are raising concerns about everything from government deficits to reducing inequities.

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Illustration: Kati Szilágyi for Bloomberg Businessweek
Bloomberg Businessweek

The Chinese Communist Party has embraced a school of thought more commonly associated with conservatives: supply-side economics.

Beijing announced 2.5 trillion yuan ($393.3 billion) in tax cuts this month—the fifth year of such reductions, which cumulatively add up to more than 9.7 trillion yuan. At the current exchange rate, that’s more than the $1.5 trillion in tax cuts enacted by the Trump administration in 2017.