China Urged to Lower Tax to Encourage Consumption

The International Monetary Fund urges China to implement measures such as allowing higher and more market-driven interest rates; lowering taxes to encourage consumption; and containing threats to the banking sector, reports the Wall Street Journal.

 

The yuan also needs to strengthen beyond its undervalued position against the U.S. dollar, says the Journal, citing the IMF.

 

"The current undervaluation is counterproductive and acts as a headwind to increasing private consumption. A stronger currency will help increase the purchasing power of households, raise the labor share of income, and reorient investment toward those sectors that serve the domestic market," notes the IMF report
 

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