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Michael Pettis: China phases out VAT rebates to support households and curb excess capacity

Michael Pettis: China phases out VAT rebates to support households and curb excess capacity
China phases out VAT rebates for reforms

Michael Pettis, economist, professor of finance, nonresident senior fellow, author, macroeconomic analyst at Peking University; Carnegie Endowment for International Peace, shares that Caixin reports China is phasing out VAT rebates for several reasons, including curbing excess capacity, encouraging technology upgrades, and easing trade tensions.

The move could also help free up fiscal resources, according to some researchers, who argue that savings from lower rebates may be redirected to support households.

Pettis previously critiqued a McKinsey Global Institute report for confusing discussions about global trade imbalances and industrial policy. He also highlighted a shift in China private equity, noting state-backed investors are now the main capital source for the industry. His recent comments add to his ongoing analysis of China’s economic policy adjustments.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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