Beijing made no bones about its preference for Al Gore in the United States presidential race. Its view was that the devil you know is usually better than the devil you don't. But Beijing will no doubt be pleased by one policy of President George W. Bush - his advocacy of a whopping tax cut for Americans. Twinned with lower US interest rates, this could help spur the slackening US economy and in turn boost China's flagging exports to this key market. 'A big downturn in the US economy would certainly have a major impact on China's exports,' said Pan Yingli, professor of economics at East China Normal University. 'But the Bush administration is pushing for a tax cut. If that stimulates the US economy we could see some help for our exports.' The Bush administration got a boost from US Federal Reserve chairman Alan Greenspan who has thrown his considerable clout behind big reductions in taxes. The Fed chairman, who had been chanting the mantra of paying down the national debt, has signalled his current view that budget surpluses would allow for a big tax cut. The Bush proposal on taxes calls for cuts of US$1.6 trillion over 10 years. In addition to this fiscal stimulus, the US economy eventually will get a boost from the Federal Reserve's combined cuts in interest rates of a full percentage point. Further interest rate cuts by the Fed are also expected in the months ahead, and this should be enough to make Beijing's Communist Party leaders stand up and cheer. Strong exports and heavy government spending contributed to 8 per cent growth in China's gross domestic product last year, though the rate of expansion is expected to slip back this year. Last year, China's exports rose a strong 27.8 per cent to US$249.2 billion, leaving a healthy trade surplus of US$24.1 billion. But export growth slowed markedly in the second half of the year. In December, exports were up only 8.5 per cent, compared with a peak of 45 per cent in June. The mainland's exports are expected to weaken considerably in the months ahead, and economists estimate the rise for all of this year will range from 8-12 per cent. 'China's exports will look pretty bad in the first half of this year,' said Morgan Stanley Dean Witter's Andy Xie. Mr Xie said that export growth is likely to be 10 per cent this year though the figure could reach 12 per cent. Mr Bush, mindful of criticism from the Democrats that the Republicans were favouring the wealthiest Americans, is looking to reduce the tax burden for those at the bottom of the tax scale as well. He wants to reduce the minimum tax rate to 10 per cent from 15 per cent. More money in the pockets of low-income consumers would presumably encourage purchases of lower-end goods - many of them made in China. If the tax cut and lower interest rates give the US economy a 'soft landing' this year, this could help China in other ways. By staving off a sharper downturn, there is less likelihood that the US would initiate trade actions against imported Chinese goods. 'If there is a big downturn [in the US economy], there could be more trade measures aimed at us,' Ms Pan said. 'Those import curbs could hurt.' China could become a member of the World Trade Organisation this year, and that would give Beijing more leverage in deflecting trade sanctions. But trade officials in Beijing would no doubt welcome the prospect of reduced trade friction. And as China looks ahead to slower export growth, it is unlikely to follow the US Federal Reserve and trim its own interest rates to stimulate the domestic economy. Beijing has cut interest rates seven times since May 1996, leaving it little room for further reductions. Interest on one-year yuan deposits at domestic banks is now 2.25 per cent - compared with 5 per cent for US dollar deposits. 'The interest rate game is over,' Mr Xie said.