China’s Economic Support Plan Had One Job, And It’s Probably Failed

China’s Economic Support Plan Had One Job, And It’s Probably Failed
Carl Hazeley

over 1 year ago1 min

Mentioned in story

China just announced a $146-billion economic rescue package, focused on infrastructure spending, and, frankly, no one seems impressed.

Typically, announcements about new economic “stimulus” are welcomed by investors and economists alike, but stock and bond markets barely took notice of this one, and economists were quick to shrug it off.

In essence, economists don’t think this package, which includes money that went unused in previous packages, will do enough to fix the damage from repeated Covid lockdowns and a new property market slump. What’s more, given that the government has said it won’t “flood the economy with excessive stimulus”, people are getting the sense that this might be all there is, at least for a while. That’s likely to have an impact on consumer and business confidence, denting how much they’re willing to spend and invest, and in turn making the prospects for economic growth even tougher.

China’s targeting 5.5% annual economic growth, and while it’s admitted the economy probably won’t achieve that this year, how much it falls short is up for debate. Goldman Sachs economists, for instance, are projecting a 3% growth rate, while economists on average are forecasting 3.7%. And no one’s likely to revise those figures higher right now…

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