Friday, June 30, 2017

China factory output picks up; Hong Kong's 20 years with China; India's sweeping tax reform

1 China factory output perks up (Straits Times) China's manufacturing sector expanded at the quickest pace in three months last month, buoyed by strong production and new orders, reassuring news for the authorities trying to strike a balance between deleveraging and keeping the economy on an even keel.

The official manufacturing Purchasing Managers' Index (PMI) was at 51.7 last month, the eleventh straight month of expansion, and up from 51.2 in May, a monthly survey by the National Bureau of Statistics showed. It was the fastest pace since March.

The survey supports broad consensus that China's economy is stabilising at a moderate pace rather than slowing sharply, suggesting that it is on track to meet its annual growth target of 6.5 per cent for this year.

Still, most China observers agree that the world's second-biggest economy will continue to cool as the authorities reduce high levels of debt across many of the heavy industries, crack down on financial risks and tighten monetary conditions.

2 Hong Kong’s 20 years with China (BBC) The Chinese president has sworn in the new leader of Hong Kong, Carrie Lam, as the territory marks 20 years since its handover to China from Britain. Xi Jinping joined a series of lavish events, including a flag-raising ceremony, amid tight police security.

But clashes have taken place between pro-democracy and pro-Beijing demonstrators close to the site, with several arrests made. Many parts of the city were shut down as part of the security operation.

The pro-democracy party, Demosisto, said police had arrested five of its members, and four members from the League of Social Democrats. Among those said by the group to have been arrested was Joshua Wong, the leader of the so-called umbrella protest movement.

3 India’s sweeping tax reform (Financial Express) India introduced a historic tax reform, bringing in the Goods and Services Tax. The GST regime would subsume various taxes and there would be a single tax law and four tax rates—5%, 12%, 18% and 28%—that would be charged by the federal government and the states.

Also, a number of goods and services have been exempted from the tax structure. Tax rates under GST have been largely kept at existing levels for most sectors, barring a few. The threshold limit for exemption from levy of GST is Rs 2 million for the states except for the special category northeastern states, where it is Rs 1 million.

A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28% to recover amount for compensation to the states. In fact, GST will bring in transparency and encourage investments in organised sectors, helping the economy gather growth momentum.

GST will create a level playing field between unorganised and organised segments. Moreover, GST will lower logistics costs due to the decline in transit time because of elimination of multiple check points – octroi, state borders.

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