Dow Jones is reporting that China has announced its mini-stimulus:
On Wednesday, Beijing pledged to speed up railway construction, particularly in the nation’s central and western regions, and offer more financing channels for the railway system. It added that projects that already had been approved would be “rolled out aggressively” and it said it would boost subsidies for some operations that were in the public interest.
The State Council also promised to step up financing for the railways, which are already a major issuer of bonds. It said the government would offer 150 billion yuan in bonds to support railway construction this year.
Unlike the steel, cement and solar sectors of the economy, the rail system isn’t facing overcapacity amid slower economic growth, analysts noted.
The government said it also would spend more on slum clearance and upgrading poorer urban areas. It added that the China Development Bank, a lender for key government policy projects, would set up a special arm to issue bonds to support new homes.
It also said it would extend existing tax breaks to small businesses until the end of 2016 and it would raise the threshold for taxing smaller businesses, which have been struggling as economic growth slows.
“It’s a bit of a rerun of what we saw last year — something less than a stimulus package and more of piecemeal measures to ensure they reach their growth target,” said Mark Williams, economist at Capital Economics in London.
A rerun perhaps, but it appears smaller. Last year $2 trillion yuan was chucked into the economy, this is acceleration not new spending and appears considerably smaller (though no total figure was provided).
Short term stabilisation of growth in the low 7% range is the objective.
