Place your bets. Will China announce
new economic stimulus to boost economic growth? Will the world's largest economy and the biggest market between BRICS (acronym to Brazil, Russia, India, China and South Africa) be able to drive a recovery across the globe? What can be said for sure right now is the expectations for new stimulus to boost economic growth in China have been increasing around the world.
The speculation has risen after
the Chinese government announced last week infrastructure plans to build
highways, waterways, urban rail and waste water treatment plans estimated in 1 trillion
yuans (approximately US$156 billion). The Chinese government did not describe
the investments as a stimulus package, but analysts say the measure signals a
shift in policy.
Hope for new stimulus
measures to boost Chinese economy has increased even more after the industrial
figures released yesterday. China’s industrial production grew 8.9% year-on-year
in August—the lowest result since May 2009, when the world was in the depths of the
global economic crisis. Imports unexpectedly fell 2.6% in July as well, with
softened domestic demand.
On Saturday, President Hu
Jintao said the “underlying impact of the financial crisis is far from over”.
To some analysts, this was another signal that the Chinese government is
worried about the economic slowdown and has become open to resorting new stimulus
measures. China's gross domestic product (GDP) expanded 7.6 percent in the second
quarter of 2012 the worst performance in three years and the sixth straight
quarter of easing.
After the infrastructure investment
plan, it seems that Chinese policymakers might consider implementing more
fiscal measures to support economic growth. Speculation is that the Chinese
government will likely act soon, possibly even cutting interest rates.
The Chinese government has taken steps this year to stimulate growth
by cutting interest rates twice in quick succession. The government also
slashed the amount of funds banks must keep in reserve as ways to increase
lending. In 2008, China carried out a huge 4.0 trillion yuan fiscal stimulus
package to fight against the global financial crisis.
0 comments:
Post a Comment