Bloomberg is reporting that regional markets (and the ASX) are up on speculation about Chinese stimulus:
China’s stocks rose for a second day, driving the benchmark index to a two-week high, on speculation the government will take more steps to halt a decline in economic growth.
…“There are expectations China will introduce more stimulus to boost the economy,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “There’s optimism the economy will recover in the second half.”
…China’s cabinet agreed to revive financial incentives for consumers to trade in their passenger cars to help increase demand in the world’s biggest vehicle market, a government official said yesterday. The State Council approved a cash-for- clunkers plan last week and relevant ministries are working on details, said the official, who asked not to be identified because the matter hasn’t been made public.
…The promotion of energy efficient flat-panel televisions and energy-saving air conditioning is projected to stimulate consumption of more than 135 billion yuan ($21.3 billion), the Ministry of Finance said in a statement yesterday.
The People’s Bank of China may reduce the lending rate as soon as June, Xu Xiaoqing, Liu Mingxi and Chen Jianheng, analysts at CICC, wrote in a report yesterday. A deposit rate cut may follow in the second half of the year on easing inflation, it said.
There is stimulus coming, as we’ve reported in the past few weeks. But this is pretty thin stuff and one wonders why the AFR felt it needed to beat it up:
The Chinese government is set to approve a new round of fiscal stimulus worth around 2 trillion yuan ($A310 billion), as it attempts to prevent a sharp slow-down in the world’s second largest economy.
The package is expected to be around half the size of the stimulus provided in 2008 and is likely to once again focus on infrastructure projects, public housing and subsidies for consumer goods.
The package, which is being widely reported by local media, is good news for Australian miners as it is likely to increase demand for coal, iron ore and other base metals.
Not be outdone, The Australian has also announced that “China unveils $300 billion stimulus”:
AUSTRALIA’S economy is poised to benefit from the Chinese government’s quiet unleashing of a stimulus package worth as much as ¥2 trillion ($300 billion) as the Asian giant struggles to reverse a fall in economic growth induced by property sales restrictions and falling export demand.
Dubbed a “mini-me” version of the stimulus package unveiled in 2008 to combat the initial hit from the global financial crisis, the program announced today includes accelerating infrastructure projects, fresh subsidies for cars and electrical goods as well as loosening monetary policy. The latter is likely to include an interest rate cut and further cuts in the bank reserve ratio, with the aim being to free up more cash for loans.
Dubbed by who I wonder because as far as I can tell, the source of this very large stimulus package is not the Chinese government but a report by Credit Suisse released yesterday. Also from Bloomberg:
The Chinese government’s stimulus in response to the nation’s economic slowdown will probably be as high as 2 trillion yuan ($315 billion), half the size of 2008’s package, Credit Suisse Group AG said.
Spending on investment will range from 1 trillion yuan to 2 trillion yuan, compared with the 4 trillion yuan stimulus enacted in response to the global financial crisis, Tao Dong, a Hong Kong-based economist, said in a research note today. The government actions will aid a rebound in growth that may slow to 7 percent or “slightly below” this quarter, Tao said.
More like Chinese whispers of stimulus and desperately poor reporting.
Nonetheless, stimulus is coming, a more sober assessment of which is available below from Phat Dragon.
