{"id":20110,"date":"2012-05-30T20:30:41","date_gmt":"2012-05-30T12:30:41","guid":{"rendered":"http:\/\/www.chinahearsay.com\/?p=12945"},"modified":"2012-05-30T20:30:41","modified_gmt":"2012-05-30T12:30:41","slug":"the-next-new-thing-chinas-mini-stimulus","status":"publish","type":"post","link":"https:\/\/www.chinalegalblog.com\/en\/2012\/05\/30\/the-next-new-thing-chinas-mini-stimulus\/","title":{"rendered":"The Next New Thing: China\u2019s \u201cMini-stimulus\u201d"},"content":{"rendered":"

Big economic news always comes with a label. First there was the “Grexit” and now the “mini-stimulus.” It’s not clear who was responsible for this one, possibly Joe McDonald at AP<\/a>. Joe is a very thoughtful, intellectual type, though, so if this is his work, he must have been on a tight deadline or something. “Mini-stimulus” doesn’t have a lot of zazz, certainly not like “Grexit,” which admittedly has quickly become annoying as hell.<\/p>\n

Then again, it seems as though “mini-stimulus” is exactly what we’re going to get, so the term certainly is descriptive. You see, China last pushed through a stimulus package in 2008, and it was a big ‘un, hundreds of billions of dollars. And it worked — economic growth was shored up while the rest of the world caught its breath from the Great Recession.<\/p>\n

Unfortunately, the 2008 stimulus had its drawbacks. China isn’t all that good at spending money efficiently, and not all that money that was poured into the economy, a lot of which was funneled through State-owned banks, was spent in a productive manner. The result? A lot of bad debt and unproductive projects, not to mention a real estate bubble and generalized inflation.<\/p>\n

No one wants that again. But the economy is flagging, due in part to a drop-off in exports. So if a 2008 type of stimulus is not possible, the next best thing is . . . you guessed it, a mini stimulus.<\/p>\n

And there was much rejoicing. Sort of. The markets actually seem rather confused by the messaging of all this. One day we’re up, the next day we’re down. First the government says there will be a stimulus, then it tries to lower expectations. It’s making me dizzy.<\/p>\n

And then there’s the big picture. Should China use this opportunity to make some significant structural changes to the economy? Northwestern Professor Victor Shih<\/a> says yes, while Citi’s Shen Minggao<\/a> says it ain’t gonna happen. I think Victor was speaking in terms of what China “should” do, while Shen was a bit more firmly rooted in what was likely. Both articles are excellent.<\/p>\n

By the way, we still don’t know how mini the mini stimulus will be. If you tally up the initiatives announced so far, the amount seems kind of small given the size of China’s economy. Perhaps the PBOC could fly Paul Krugman to Beijing to give a presentation on what happens when a government underestimates the magnitude of a demand slump.<\/p>\n

\n

\u00a9 Stan for China Hearsay<\/a>, 2012. |\nPermalink<\/a> |\nNo comment<\/a> |\nAdd to\ndel.icio.us<\/a>\n\nPost tags: stimulus<\/a>\n<\/small><\/p>","protected":false},"excerpt":{"rendered":"

Big economic news always comes with a label. First there was the \"Grexit\" and now the \"mini-stimulus.\" It's not clear who was responsible for this one, possibly Joe McDonald at AP. Joe is a very thoughtful, intellectual type, though, so if this is his work, he must have been on a tight deadline or something. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[205,194],"tags":[3542,3726],"class_list":["post-20110","post","type-post","status-publish","format-standard","hentry","category-china-business-economy","category-news-chinese-law","tag-short-takes","tag-stimulus"],"_links":{"self":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/20110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/comments?post=20110"}],"version-history":[{"count":0,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/20110\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/media?parent=20110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/categories?post=20110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/tags?post=20110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}