MA Jun: the extent of tax and fee cuts may reach or even surpass 1% of GDP


While the recent stock market has experienced a constant drop, and the pledge of shares is facing the pressure of unwinding, Financial Stability and Development Committee of the State Council held a special meeting on “preventing and defusing financial risks”. In regard to the policy trend, the reporter interviewed Ma Jun, Director of the Center for Finance and Development of Tsinghua NIFR and member of the PBC Monetary Policy Committee. Ma believes a few measures shall be taken on policy level to boost market confidence.

According to Ma, from a general and macro perspective, the tax cuts mentioned by Premier LI Keqiang will greatly benefit the economy. Ma predicted that the extent of tax and fee cuts may reach or even surpass 1% of GDP, which will outpace the US.

To solve the financing difficulty for private enterprises, Ma believes there will also be some practical moves. He predicted that the supervision bodies will make clear of Banks’ due diligence exemption. Biased clause from banks, such as “on term of violation, lifelong responsibility is required” when handling private enterprise loans, will not be allowed. Furthermore, Government will provide special “guarantee fund” to increase banks’ willingness to loan to private enterprises.

From the global expect, Ma believes that under certain circumstances, there is a rise in the US’ willingness to re-start trade negotiation with China, and there is a rising possibility that China-US trade disputes will ease down.

In the short-term, Ma believes the supply in the capital market will be refined by Government measures, insurances and banks’ financing tools. “Some local governments have started to provide liquidity support to listed companies, which will also help to ease cash flow pressure of these enterprises.”


>Tsinghua National Institute of Financial Research