Changing China

Giant on the move

No new stimulus? Buy!

March 5, 2009

Global markets surged on Wednesday, led by the Shanghai stock market’s 6.1 percent gain, on hopes that Chinese Premier Wen Jiabao would announce a new stimulus on top of the 4 trillion yuan ($585 billion) two-year spending plan unveiled in November.

Investors were optimistic that with a bit help from the central government, the economy could turn the corner and start to regain lost ground, heading off a rise in unemployment that officials fear could threaten social stability.

But in his 2-hour report to the annual meeting of parliament, Wen made no mention of the much hoped-for injection.

No matter. Speculators and investors poured back into China’s share market on Thursday, grasping new reasons to be upbeat, and pushing up the index another 1.04 percent.

Wen’s speech was positive enough to support hopes that an economic recovery was starting. He set an ambitious target of 5 trillion yuan in new lending this year, and insisted this year’s 8 percent economic growth target would be met.

Will that be enough to keep investors’ momentum going?
Here’s a link to Reuters coverage of the speech and its impact:

Photo captions: Premier Wen Jiabao delivers speech during the opening ceremony of the National People’s Congress at the Great Hall of the People, REUTERS/Jason Lee

Comments

Noting China’s joblessness figure (20 million and rising), the Globe and Mail argues that the Asian giant must become more like us, i.e., it needs a “consumer class.” (http://business.theglobeandmail.com/ser vlet/story/RTGAM.20090227.wrcover28/BNSt ory/Business/home) The Stock Research Portal Blog responds that “China sits with U.S.$2 trillion in U.S. Government backed paper, a strong work ethic, and an ideology that currently does not dictate that money be spent on social programs per se.”

Conclusion: “China has both funding and time on its side.”

Via Stock Research Portal (http://www.stockresearchportal.com)

China needs to somehow create more jobs for the unemployed otherwise this could grow into a very big problem for them.

Posted by gengar | Report as abusive
 

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