China Announces Mini Stimulus To Reignite Growth

China’s leaders have unveiled a mini-stimulus aimed at shoring up sputtering growth in the world’s No. 2 economy.

Under the measures announced by Premier Li Keqiang, small businesses will get bigger tax breaks, social housing will be built to replace shantytowns and railway construction will be sped up.

Li, China’s top economic official, announced the new measures on Wednesday evening after a regular meeting of the State Council, China’s cabinet.

It comes as signs mount that China’s economy continues to slow, raising fears it may expand less than the 7.5 percent that the country’s leaders have targeted. Factory data released earlier this week showed that business conditions in the first quarter remained mostly weak. China’s economy has been decelerating after a decade of double-digit growth as its communist leaders try to shift the economy’s focus to domestic consumption instead of trade and investment.

The stimulus announcement “means policymakers don’t want to take the risk of seeing growth slipping to below 7 percent,” HSBC economists Qu Hongbin and Sun Junwei said in a report. “The government is clearly signaling that it intends to follow up with real policy actions to maintain growth.”

China’s growth rates remain high compared with the recent sluggish standards of Western nations, but last year’s expansion of 7.7 percent was the slowest in two decades.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza