China catches Trump fever, follows Trump to slash taxes

China announced that it would slash corporate taxes two times this year to jumpstart its weak growth.  It comes as President Trump announced his plan to cut corporate taxes in the U.S. from 35% to 15% over the course of his term, driving the stock market to soar to new heights.

Hmmm – seems that tax cuts really do have an effect on improving economic growth, contrary to the canards peddled by the Obama administration over the past eight years, at last in the eyes of the Chinese.

The Chinese, after all, are a lot of things, but one thing they aren't is stupid.  With their move following Trump's, what we are seeing is quite possibly a sort of contagion of free-market ideas spreading throughout the world, with China following the Trump example.  Nobody wants the get all the stock market gains, new jobs, new tech and rising incomes all to itself.  Nations want a little of that for their people, too, sometimes just to keep the coups d'état at bay.  Might not be the case for China, but it's perfectly possible to see that happening elsewhere.  The bottom line is that foreign leaders can see what Trump's free-market ideas are doing for the mighty U.S., and if they follow the playbook, they too will get exactly the same result.

There probably also is a tax competition going on.  The 15% corporate tax rate Trump announced was probably borrowed from the U.K.. which came up with that 15% figure and followed through.  As a result, the U.K. boasts the strongest economy in Europe.  Brexit, as a matter of fact, was successful very likely because it was linked to U.K.'s outstanding economic performance compared to the rest of Europe.  The 15% corporate rate bought Britain its freedom.

Trump followed it, and who knows what heights will come of it for the U.S.?  All we know is that it's going to be good.  Now China is going for the corporate tax cut brass ring after Trump – clumsily, it seems, from the South China Morning Post report (they should go for a 15% flat tax with no idiotic tiers as we currently see), with an eye toward not being left out of the action.

Chicoms as Milton Friedman-style tax-cutters?  It kind of boggles the mind.

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