Chinese Premier Wen Jiabaoâ€™s pledge to focus more on bolstering growth spurred speculation the government will step up efforts to combat a slowdown in the worldâ€™s second-largest economy.
Wen called for â€œputting stabilizing growth in a more important positionâ€ and didnâ€™t mention concern about inflation in remarks published yesterday by the official Xinhua News Agency. China may announce stimulus actions in the near term, according to a front-page commentary today in the China Securities Journal, which is published by Xinhua.
The shift in language suggests authorities are â€œseriously concerned about growthâ€ and â€œready to introduce further measures,â€ Bank of America Corp. said in a research note today. The government on May 12 cut banksâ€™ required reserves for the third time in six months following data that showed trade, industrial production and lending were below forecasts in April.
â€œThe April data has been a wake-up call for China,â€ said Alaistair Chan, a Sydney-based economist at Moodyâ€™s Analytics. â€œThere will probably be some stimulus measures through monetary policy, more bank lending and infrastructure projects being brought forward.â€
China has allowed the yuan to weaken against the dollar this year after it strengthened 4.7 percent in 2011. The currency rose 0.06 percent today, the most in a month, to 6.3243 at 11:56 a.m. in Shanghai, following a decline of about 0.5 percent in 2012 through May 18. The MSCI Asia Pacific Index of stocks rose 0.5 percent at 12:56 p.m. in Tokyo.
The Xinhua report on Wenâ€™s weekend visit to Wuhan, the capital of Hubei province, was reposted yesterday on the governmentâ€™s website, attributing the information to the State Councilâ€™s general office.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.