China recortaria los impuestos para impulsar la expansion de la economia en la segunda economia mas grande del mundo. Sus exportaciones se han debilitado y la amenaza de los malos prestamos disminuyen las opciones del mercado.
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(China le puede enseniar economia tranquilamente a los Europeos)
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Wen May Cut China Taxes to Spur Growth in 2012
By Bloomberg News - Dec 12, 2011 8:33 PM ET .
China may use tax cuts to shore up expansion in the second-largest economy next year as export growth weakens and the threat of bad loans from stimulus spending narrows the government’s options.
The nation’s top officials are mapping out policies for 2012 at the annual Central Economic Work Conference in Beijing. The event started yesterday, according to the state-run Xinhua News Agency.
Banks from China International Capital Corp. and Goldman Sachs Group Inc. to Barclays Capital forecast Premier Wen Jiabao will cut taxes after fiscal revenue surged past the government’s target this year. Lower levies would spur consumption without the bad-debt risks triggered by a record 17.5 trillion yuan ($2.8 trillion) of lending in 2009 and 2010 that funded infrastructure projects and real-estate speculation.
“China is no longer able to rely on massive investment in infrastructure building to stimulate the economy,” said Yao Wei, a Hong Kong-based economist with Societe Generale SA, the only economist to accurately forecast China’s growth last quarter in a Bloomberg News survey. “Tax cuts are unavoidable.”
Europe’s debt crisis is cutting demand in the nation’s biggest export market, while a government campaign to rein in property prices is threatening home sales and construction. Economic growth cooled to 9.1 percent last quarter, the least in more than two years, and the increase in exports in November was the weakest since 2009 excluding seasonal distortions.
Local-Government Debt
The Shanghai Composite Index (SHCOMP) has fallen about 25 percent from this year’s peak in April as the government wrestles with the aftermath of the last stimulus package, including local- government investment vehicles saddled with debt and elevated property prices. Companies also face rising labor costs, a factor in retailer and beermaker China Resources Enterprise Ltd. reporting a profit decline in the third quarter.
Fitch Ratings said today that housing construction will grow at a slower pace next year, with smaller developers “vulnerable” amid curbs on home purchases and tight liquidity.
Short sellers are betting that Zoomlion Heavy Industry Science & Technology Co., China’s second-biggest maker of construction equipment, will drop as building slows and customers fall behind on payments. Speculators lifted bets against Zoomlion to 22 percent of shares outstanding last month, the highest proportion on record and the most among Hong Kong- traded stocks tracked by Data Explorers.
‘Prudent’ Monetary Policy
While the 25-member Politburo last week affirmed an unchanged “prudent” monetary and “proactive” fiscal stance for next year, a Nov. 30 cut in banks’ reserve requirements indicated a shift toward a bigger emphasis on supporting growth.
Inflation is moderating after reaching a three-year high of 6.5 percent in July.
Consumption taxes and corporate income levies may be cut, while taxes may be increased for some industries to achieve energy-saving and emission targets, according to Peng Wensheng, an economist for CICC who works in Hong Kong and Beijing.
A trial to reduce levies for service industries in Shanghai may be rolled out nationwide, cutting taxes by about 70 billion yuan, Peng said. Shares in companies including China Eastern Airlines Corp. (670) and Shanghai International Airport Co. rallied after the October announcement of the experiment.
Retail Sales
“A lot of our portfolio managers are still very much focused on consumer-related areas,” Catherine Yeung, a Hong Kong-based investment director at Fidelity Worldwide Investment, said in an interview with Bloomberg Television yesterday. Tax cuts are helpful to consumer spending, which is “very much on track” after a November year-on-year retail-sales gain of about 17 percent, she said.
China will “preset or fine tune policies in light of changes in economic development,” the Politburo said last week, adding that the government will seek “stable and relatively fast economic growth while adjusting the economic structure and regulating inflationary expectations.”
Standard Chartered Plc analysts forecast five reserve-ratio cuts next year as the economy grows 8.1 percent.
China has less capacity now to “turn on the taps” of stimulus than in the aftermath of the Lehman Brothers Holdings Inc. collapse in 2008 mainly “because of problems in the banking system,” Andrew Colquhoun, the Hong Kong-based head of Asia-Pacific Sovereigns for Fitch Ratings, said in an interview with Bloomberg Television yesterday.
Nomura Holdings Inc. estimates that China’s economy may expand only 7.9 percent in 2012, the slowest pace in 13 years.
Fiscal Revenue
China is routinely exceeding its projections for revenue, the World Bank noted in a report in April. The 27 percent increase so far this year compares with an 8 percent goal.
Eleven-month fiscal revenue was 9.73 trillion yuan, the finance ministry said, boosted by higher-than-anticipated tax takes from industrial profits and imports. That’s exceeded the full-year goal of 8.97 trillion yuan for central and local governments laid out in this year’s budget in March, and a 9.12 trillion yuan total that includes money from a so-called stabilization fund.
In November, revenue growth slowed after the economy cooled, car and property purchases moderated, export tax rebates rose and the threshold for personal income tax increased, according to the Ministry of Finance.
Tax-Free Income
“The government is likely to call for structural tax cuts which we believe should be welcomed in light of the arguably overly rapid fiscal revenue growth we saw this year,” Song Yu, a Hong Kong-based economist at Goldman Sachs, said in a Dec. 6 research note. The conference will put more emphasis on maintaining economic growth, Song said.
In September, the government raised the personal income tax threshold to 3,500 yuan ($550) per month from 2,000, reducing the number of tax payers by 60 million, according to government estimates.
The government has raised the threshold for people in rural areas defined as living in poverty by 81 percent to 2,300 yuan a year, making 128 million citizens eligible for subsidies, according to Xinhua. Zhou Yongkang, the country’s top security official and a member of the Politburo, said last week that the nation needs to improve “social management” to better deal with the “negative effects” of the market economy.
Central and provincial government officials, heads of state-owned enterprises, economists and academics attend the work conference, which fleshes out policy guidelines for the following year. The meeting will end tomorrow, according to the Economic Observer newspaper.
To contact Bloomberg News staff on this story: Victoria Ruan in Beijing at
vruan1@bloomberg.net