Economy

VAT, the largest tax category in China, accounted for around 38% of national tax revenue in 2023, official data show.The report did not detail provisions of the law. The latest draft included exemptions for some agricultural products, imported instruments and equipment for scientific research and teaching, some imported goods for the disabled and services provided by welfare institutions such as nursery, kindergarten and nursing institution for the elderly.To aid specific sector or business, the government could include new items into the scope of tax deductibles.”With the introduction of the VAT Law, 14 tax categories out of 18 in China have their own laws, covering the majority of tax revenue and marking significant progress of implementing the principle of statutory taxation,” Xinhua said.The law was passed at the end of a session of China’s top legislature, the National People’s Congress Standing Committee, which began on Saturday.Last month, China unveiled tax incentives on home and land transactions to support the crisis-hit property market. Residents are exempt from VAT when they sell their homes at least two years after purchase.In September 2023, the finance ministry said it would extend a VAT refund policy aimed at encouraging domestic and foreign research institutions to purchase Chinese-made equipment until the end of 2027.China in 2019 cut the VAT rate for manufacturers to 13% from 16%, and to 9% from 10% for the transportation and construction sectors.With the slowing world’s second-largest economy, VAT revenue in the first 11 months this year dropped 4.7% from the same period last year to 6.1 trillion yuan ($840 billion), as businesses suffered weak domestic demand. For November, VAT revenue rose 1.36%.”The rebound in VAT reflects improving economic vitality, as sales and business activity recover. It may also indicate a recovery in industrial profits, further supporting economic momentum,” Tommy Xie, head of Asia macro research at OCBC, said in a note on Monday.($1 = 7.2986 Chinese yuan renminbi) More

The People’s Bank of China (PBOC) issued 300 billion yuan ($41.10 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at 2.00%, unchanged from the previous rate, according to an online statement from the bank.The bid rates in Wednesday’s operation ranged from 1.90% to 2.30%, the central bank said.A batch of 1.45 trillion yuan worth of MLF loans was due to expire this month.($1 = 7.2984 Chinese yuan)(This story has been refiled to correct the spelling of ‘cenbank’ in the headline) More

The minimum wage in 2025 will rise to 1.4 million pesos ($323.90) per month, Petro said, up from 1.3 million pesos per month this year.The increase is smaller than the hike announced for this year. At the end of 2023, the government announced the minimum wage for 2024 would increase by 12%.Business groups and unions had reached an agreement with the government over minimum wage increases for 2022 and 2023. A deal was not reached for the minimum wage this year.The technical team of Colombia’s central bank forecasts annual inflation in Latin America’s fourth-largest economy will close this year at 5.3% before slowing to 3.1% by the end of 2025.($1 = 4,395.44 Colombian pesos) More

The company, along with other Chinese firms, have been at the center of new U.S. laws aimed at restricting their businesses in the United States due to national security concerns.The U.S. House of Representatives had passed a bill in September which would prohibit federal contracts with targeted firms and those that do business with them.The bills are designed to keep Americans’ personal health and genetic information from foreign adversaries and aim to push U.S. pharmaceutical and biotech companies to lessen their reliance on China for everything from drug ingredient manufacturing to early research.WuXi said it would also sell Oxford Genetics, the UK-based operating entity of the WuXi ATU business to Altaris LLC.Altaris declined to comment beyond the given details while WuXi AppTec did not respond to a Reuters request for comment. More

MEXICO CITY (Reuters) – Mexico’s central bank board could discuss a rate cut of either 25 basis points or 50 basis points in its next decision in February, Deputy Governor Jonathan Heath told Reuters, even as he warned of growing uncertainty regarding U.S. trade.Heath stipulated that the final decision would depend on the conditions at the time of the meeting.The monetary authority has been cutting rates by 25 basis points since kicking off an easing cycle earlier this year, but said last week it was open to larger cuts as inflation continues to slow.But Heath warned that the possibility of tariffs on U.S. imports from Mexico has added uncertainty. In November, President-elect Donald Trump promised to apply a blanket 25% tariff on goods from Mexico if more action is not taken to curb the flow of drugs and migrants into the United States.”If Trump doesn’t announce a major disruption (in his inauguration speech on) Jan. 20, if inflation is in line with projections and as long as there’s no unanticipated shock, discussion prior to the February decision could be between cutting the benchmark rate by 25 to 50 basis points,” Heath said in a written response to questions on Monday.The 70-year-old economist added that the decision was dependent on other factors such as the economic outlook, ratings agencies’ perspectives and more information on services inflation, which has been sticky. “Even if the discussion takes place, the larger adjustment is not a given,” Heath said.But anything larger than a 50-basis-point cut from the current 10% rate would be “completely out of the question,” Heath said.Even then, the decision from the board may not be unanimous, Heath said, as the other board members differ on the speed and size of rate cuts to bring inflation back within target.With the current information, the benchmark rate ending 2025 between 8% and 8.5% is “reasonable,” Heath said, but warned a number of factors could influence that. Analysts polled by the central bank expect the Mexican economy to grow just 1.12% next year, from around 1.6% this year. They see headline inflation closing 2025 at 3.8%, slowing from 4.37% at end-2024.Heath attributed the expected slowdown to cautiousness from the private sector in the face of an uncertain and high-risk environment, as well as a tight fiscal policy with little wiggle room as the government works to rein in the deficit. “However, as long as the sluggishness persists, the more likely it is that we’ll reach our inflation target in the time frame estimated,” he said. “That will lead us to continue lowering the rate until we reach a neutral stance.” In 2026, if Mexico is not hit with any negative shocks, inflation should come to within 3%, the monetary stance should be neutral and the economy will be in full-throttle expansion, Heath said. More

“High frequency indicators for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown in momentum witnessed in Q2, driven by strong festival activity and a sustained upswing in rural demand,” the Reserve Bank of India (NS:BOI) said in an article titled ‘State of the Economy’.Additionally, the prospects for agriculture and rural consumption are looking up due to “brisk” expansion of rabi sowing, it said.India’s GDP growth rate fell unexpectedly to 5.4% in the July-September quarter, its slowest pace in seven quarters, while inflation in November was well over the RBI’s medium-term target of 4%.If inflation is allowed to run unchecked, it can undermine the prospects of the real economy, especially industry and exports, the RBI said.However, the usual winter easing of food prices is setting in and the prospects of private consumption and exports accelerating are getting brighter, it said in the bulletin.The RBI’s Monetary Policy Committee kept its key interest rate unchanged earlier this month citing inflationary concerns. But it cut banks’ cash reserve ratio for the first time in over four years, effectively easing monetary conditions as economic growth slowed.High prices are the cause for demand slowdown in India, and aligning inflation to the central bank’s 4% target is key to ensuring sustained economic growth, minutes of the RBI’s latest policy meeting showed.Sustained government spending on infrastructure is expected to further stimulate economic activity and investment, the bulletin said.Global headwinds, however, pose risks to the evolving outlook for growth and inflation, it added. More

By Abhijith Ganapavaram and Utkarsh Shetti(Reuters) -American Airlines on Tuesday lifted an hour-long ground stop of all its flights in the U.S. due to an unspecified technical issue, a notice on the U.S. aviation regulator’s website showed. More

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