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China cut it's GDP target, indices and AUD under pressure
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Loading...According to China’s Premier Li Keqianq, China is cutting 2017 GDP target to around 6.5% or higher if possible. LI was addressing the country’s National People’s Congress on its annual session. The target was realistic and would help steer and steady expectations. According to Keqianq, China would continue to implement a proactive fiscal policies and will also maintain a prudent and neutral monetary policy (China has flagged in recent months a shift away from a loose monetary stance to discourage speculative investments. As a reminder, since February, the PBOC has raised interest rates on some lending facilities).
China’s Premier added that government is aiming to cut companies’ tax burden by about 350bn yuan this year. China aims to create more than 11mln new urban jobs this year and to keep urban unemployment rate within 4.5%. According to some analysts the 6.5% is very high. But whatever the number is China will probably meet it.
What is more, the Premier said that the government will tackle state "zombie enterprises" producing more coal and steel than the market needed. Li added that the world growth remained sluggish while de-globalization and protectionism were gathering pace. China still has many innovative means, policy reserves to support its economy and country will improve foreign investment environment in 2017. Li promised to staedy exports in 2017.
What is more we received news about cutting 2017 steel capacity by 50mln tonnes. According to Reuters, coal output is to be cut by more than 150mln tonnes as well. China will shut or or stop construction of coal-fired power plants with capacity of more than 50 mln kw. We’ll see if a promise would come true. China also plans to cut aluminum and alumina capacity. Goldman Sachs sees it as a game changer but markets are not convinced. China’s equities moved higher (Shanghai Composite +0.45%).
AUDUSD moves higher in the morning. We will probably see a re-test of the 0.760 area if it proves successful price could drop once again. The next support area lays at 0.750, sourcce: xStation5
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