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Wednesday 4 March 2009
China May Announce New Stimulus Measures Tomorrow
Chinese Premier Wen Jiabao may announce new stimulus measures tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan as the government tries to revive growth in the world’s third-biggest economy.
(Bloomberg) -- Chinese Premier Wen Jiabao may announce new stimulus measures tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan as the government tries to revive growth in the world’s third-biggest economy.
Wen will announce “a new stimulus package” in his annual address to the nation’s legislature, former statistics bureau head Li Deshui told reporters in Beijing today. He didn’t say whether spending would increase or give further details.
Stocks surged by the most in three months on speculation increased spending will spur earnings after an export collapse dragged the economy to its weakest growth in seven years, costing the jobs of 20 million migrant workers. The Communist Party’s Politburo pledged last month a “massive” increase in government investment this year and Standard Chartered Bank Plc says the package may be doubled.
“The existing stimulus package may not be adequate considering the total collapse of global trade,” said Isaac Meng, a senior economist at BNP Paribas SA in Beijing. “There should be more spending, especially on the social side to cushion unemployment. This is quite urgent.”
The Shanghai Composite Index rose 5.3 percent as of 2:18 p.m. local time.
Reporters asked Li, who was outside a meeting of the economic group of the Chinese People’s Political Consultative Conference, whether China would double or triple the 4 trillion yuan package.
‘New Stimulus Package’
“In Premier Wen’s report tomorrow, there will be an announcement of a new stimulus package,” said Li, also a former member of the central bank’s monetary-policy committee.
China will spend more on infrastructure and to boost manufacturing in addition to the stimulus package announced in November, Reuters reported today, citing an unidentified official at the country’s top economic planning agency.
The government will reduce a tax on stock sales this year to boost equity-market transactions, Li Zhaoxing, the legislature’s spokesman, said at a press briefing today. Taxes on exports and consumption will also fall, he said.
Wen’s speech to the legislative meeting, which starts at 9 a.m. tomorrow, will be the equivalent of a U.S. State of the Union address, setting priorities for the year.
Governments around the world are pumping money into their economies to counter the worst financial crisis since the Great Depression.
U.S., Japan
The U.S. has released billions of dollars of its $787 billion stimulus plan for public works as “shovels hit the ground” in an attempt to spur job growth and revive the world’s largest economy, President Barack Obama said March 3.
Japan’s government is considering increasing low-interest loans made to companies by the state-owned Japan Development Bank to 1.5 trillion yuan ($15.4 billion) from 1 trillion yuan, two Finance Ministry officials said Feb. 27.
Australia’s A$42 billion ($28 billion) stimulus package, designed to stoke consumer spending and build schools, roads and hospitals, was passed by its Senate Feb. 13.
While China’s economy is the only one of the world’s five biggest still expanding, the pace has slowed for six straight quarters. Growth in the three months through December was 6.8 percent from a year earlier. That compares with a 13 percent expansion for all of 2007.
Tongling Nonferrous Metals Group Co., China’s second-biggest copper smelter by output, said Feb. 27 that profit tumbled last year after prices slumped. Lenovo Group Ltd., the world’s fourth-biggest personal-computer maker, said Feb. 25 that it will cut 450 jobs in China to reduce costs.
Mass Incidents
With 20 million rural laborers who previously found jobs in cities now unemployed, and 7.1 million college graduates seeking work, authorities are alert to the danger of social unrest.
“Mass incidents” may jump this year, the official Xinhua News Agency’s Outlook Magazine reported in January, employing communist code for riots and civil disorder. Last month, a clash between police and about 1,000 protesting workers from a textile factory in Zigong City, Sichuan province, left six demonstrators injured, rights group Chinese Human Rights Defenders reported. The stimulus package announced in November spans spending through 2010 on public housing, railways, highways, airports, power grids and reconstruction work after last year’s earthquake in Sichuan province. A railway between Shanghai and Nanjing, a Xiamen-Zhangzhou cross-sea bridge, and a high-speed rail link between Datong and Yucheng in Shaanxi are among the projects, according to a summary by Standard Chartered.
Manufacturing Index Climbs
“The government should expand its 4 trillion yuan package to sustain an economic recovery,” Zheng Xinli, a deputy director at the policy research office of the ruling Communist Party said today.
The official manufacturing index climbed for a third month in February, signaling that the world’s third-biggest economy may be edging closer to a recovery.
While manufacturing contracted for a fifth month, the PMI is up from a record low of 38.8 in November.
Output and new orders expanded for the first time in five months, today’s data showed, evidence that the stimulus package may be taking effect. New loans jumped to a record in January as the government pressured state-owned banks to lend.
“China will pick up in the second half of this year as the stimulus package” begins working, Vivek Tulpule, the chief economist at London-based Rio Tinto Group, said yesterday in Canberra, Australia. Rio is the world’s third-biggest mining company.
1 comment:
China May Announce New Stimulus Measures Tomorrow
By Yidi Zhao and Kevin Hamlin
4 March 2009
(Bloomberg) -- Chinese Premier Wen Jiabao may announce new stimulus measures tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan as the government tries to revive growth in the world’s third-biggest economy.
Wen will announce “a new stimulus package” in his annual address to the nation’s legislature, former statistics bureau head Li Deshui told reporters in Beijing today. He didn’t say whether spending would increase or give further details.
Stocks surged by the most in three months on speculation increased spending will spur earnings after an export collapse dragged the economy to its weakest growth in seven years, costing the jobs of 20 million migrant workers. The Communist Party’s Politburo pledged last month a “massive” increase in government investment this year and Standard Chartered Bank Plc says the package may be doubled.
“The existing stimulus package may not be adequate considering the total collapse of global trade,” said Isaac Meng, a senior economist at BNP Paribas SA in Beijing. “There should be more spending, especially on the social side to cushion unemployment. This is quite urgent.”
The Shanghai Composite Index rose 5.3 percent as of 2:18 p.m. local time.
Reporters asked Li, who was outside a meeting of the economic group of the Chinese People’s Political Consultative Conference, whether China would double or triple the 4 trillion yuan package.
‘New Stimulus Package’
“In Premier Wen’s report tomorrow, there will be an announcement of a new stimulus package,” said Li, also a former member of the central bank’s monetary-policy committee.
China will spend more on infrastructure and to boost manufacturing in addition to the stimulus package announced in November, Reuters reported today, citing an unidentified official at the country’s top economic planning agency.
The government will reduce a tax on stock sales this year to boost equity-market transactions, Li Zhaoxing, the legislature’s spokesman, said at a press briefing today. Taxes on exports and consumption will also fall, he said.
Wen’s speech to the legislative meeting, which starts at 9 a.m. tomorrow, will be the equivalent of a U.S. State of the Union address, setting priorities for the year.
Governments around the world are pumping money into their economies to counter the worst financial crisis since the Great Depression.
U.S., Japan
The U.S. has released billions of dollars of its $787 billion stimulus plan for public works as “shovels hit the ground” in an attempt to spur job growth and revive the world’s largest economy, President Barack Obama said March 3.
Japan’s government is considering increasing low-interest loans made to companies by the state-owned Japan Development Bank to 1.5 trillion yuan ($15.4 billion) from 1 trillion yuan, two Finance Ministry officials said Feb. 27.
Australia’s A$42 billion ($28 billion) stimulus package, designed to stoke consumer spending and build schools, roads and hospitals, was passed by its Senate Feb. 13.
While China’s economy is the only one of the world’s five biggest still expanding, the pace has slowed for six straight quarters. Growth in the three months through December was 6.8 percent from a year earlier. That compares with a 13 percent expansion for all of 2007.
Tongling Nonferrous Metals Group Co., China’s second-biggest copper smelter by output, said Feb. 27 that profit tumbled last year after prices slumped. Lenovo Group Ltd., the world’s fourth-biggest personal-computer maker, said Feb. 25 that it will cut 450 jobs in China to reduce costs.
Mass Incidents
With 20 million rural laborers who previously found jobs in cities now unemployed, and 7.1 million college graduates seeking work, authorities are alert to the danger of social unrest.
“Mass incidents” may jump this year, the official Xinhua News Agency’s Outlook Magazine reported in January, employing communist code for riots and civil disorder. Last month, a clash between police and about 1,000 protesting workers from a textile factory in Zigong City, Sichuan province, left six demonstrators injured, rights group Chinese Human Rights Defenders reported.
The stimulus package announced in November spans spending through 2010 on public housing, railways, highways, airports, power grids and reconstruction work after last year’s earthquake in Sichuan province. A railway between Shanghai and Nanjing, a Xiamen-Zhangzhou cross-sea bridge, and a high-speed rail link between Datong and Yucheng in Shaanxi are among the projects, according to a summary by Standard Chartered.
Manufacturing Index Climbs
“The government should expand its 4 trillion yuan package to sustain an economic recovery,” Zheng Xinli, a deputy director at the policy research office of the ruling Communist Party said today.
The official manufacturing index climbed for a third month in February, signaling that the world’s third-biggest economy may be edging closer to a recovery.
While manufacturing contracted for a fifth month, the PMI is up from a record low of 38.8 in November.
Output and new orders expanded for the first time in five months, today’s data showed, evidence that the stimulus package may be taking effect. New loans jumped to a record in January as the government pressured state-owned banks to lend.
“China will pick up in the second half of this year as the stimulus package” begins working, Vivek Tulpule, the chief economist at London-based Rio Tinto Group, said yesterday in Canberra, Australia. Rio is the world’s third-biggest mining company.
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