PBOC’s Sheng: China can spur growth more effectively by lowering corporate taxes than by cutting interest rate

Sheng Songcheng, head of the Survey and Statistics department at the People's Bank of China (PBOC), noted on Monday that the Chinese economic growth can be boosted by slashing corporate taxes, instead of cutting rates further.

Key Quotes:

“China can spur growth more effectively by lowering corporate taxes than by cutting the interest rate, which tends to create a liquidity trap"

“China can let its deficit-to-GDP ratio rise to over 3% or even 5% in the long run as its debt is mainly held domestically and is long-term”

“Sometimes, total social financing can better reflect liquidity than M2”

“The yuan will be basically stable through next year, and there will be no significant yuan depreciation or capital outflow, at least in the near future”