The Chinese government seems to be ready to roll out some more support for the economy, which we can call fine-tuning.
China may announce new round of subsidies programme on auto purchases in rural areas, China Securities Journal reported, citing sources, while subsidies on purchases of electrical appliances will be continued and enhanced. The auto purchases subsidies will expand to cover large vehicles according to to report. The subsidies were first implemented after the financial crisis to stimulate domestic consumption.
Meanwhile, Reuters reports that the Ministry of Finance will offer RMB2.5 billion of loans subsidies for importers of “advanced technological equipment, raw materials and other components. Previously, the government has already rolled out plans to help exporters. The programme has existed since 2008, and this year’s funding will be 25% higher than the previous year according to the Ministry of Finance.
These obviously are not the massive fiscal stimulus programme that the market has been hoping for. For the time being, I am not sure how this is going to have a material impact on growth. However, specific sectors like auto (obviously) will probably be benefited by the subsidies and that contributed to the rally in some of the auto names in Hong Kong market.