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China pledges to step up tax cuts, keep liquidity ample

Beijing to maintain its pro-active fiscal policy and prudent monetary policy next year to aid growth

Beijing

CHINA will step up tax cuts and keep liquidity ample in 2019 to help support economic growth, according to a statement from the official Xinhua news agency following a key annual economic meeting of the country's top leaders.

China will keep next year's economic growth within "a reasonable range", the statement said, after the conclusion of the Central Economic Work Conference, a closed-door gathering of party leaders and policymakers.

Beijing will maintain its pro-active fiscal policy and prudent monetary policy next year, Xinhua said. "The pro-active fiscal policy should enhance efficiency, implement larger-scale tax cuts and fee reductions, and substantially increase the size of local government special bonds."

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"The prudent monetary policy should be neither too loose nor too tight, keeping liquidity reasonably ample and improving monetary policy transmission mechanism," it said.

The government will strengthen counter-cyclical adjustments of macro-policies, and make policy fine-tuning in a pre-emptive way, Xinhua said.

China will strive to support jobs, trade and investment and resolve financing difficulties for small and private firms, while curbing risks and financial market volatility, it said.

To ward off a sharp growth slowdown, the government has in recent months unveiled a raft of policy measures, including cuts in banks' reserve requirements to boost lending, tax cuts and steps to fast-track infrastructure projects.

Reuters reported this week that government advisers had recommended to top leaders that China lower 2019's growth target to 6-6.5 per cent at the annual meeting to map out the coming year's economic agenda.

China's economic growth slowed to 6.5 per cent in the third quarter, the weakest pace since the global financial crisis. Data last week showed surprising softness in November factory output and retail sales, indicating momentum is likely to be reduced further in the current quarter. REUTERS