China Lowers 2019 GDP growth target to 6.5%

The move comes as China sets its major economic targets ahead of its annual legislative meeting in Beijing.

Its defence budget growth target was set at 7.5 % lower than the 2018 growth target figure of 8.1%. China also announced a major tax cut.

The GDP target was lowered to 6.5%, allowing policy makers room to move, according to Bloomberg reports.

The lower number indicates the GDP target would be the slowest pace of economic growth in almost three decades. This is a result of China’s long deceleration.

Bloomberg economists see output growth slowing to 6.2% in 2019 down from 6.6% in 2018, while easing further in 2020 and 2021.

China announces major tax cut

China also announced a major tax cut with policy makers announcing on Tuesday a 3% cut to the top bracket of value added tax, in attempts to strengthen the manufacturing sector.

The target budget deficit for 2019 was set at 2.8 % of GDP, up from last year’s goal of 2.6%.

US-China trade wars

On Sunday the US and China came closer to a trade deal that could lift most or all US tariffs if Beijing follows through on pledges around protecting intellectual-property rights and buying more American products.

Economists say that if the tariffs were lifted it would improve the Chinese economy, although debt risks and signs of weakening consumption remain a concern.