China hits the PRINT Button

[Mega]

http://www.telegraph.co.uk/finance/c...tens-Asia.html

Mega's view:-
Ben FFS PRINT !!!!!!!!!...........If he fires one, YOU FIRE ONE!
Cheers
Mike

[globaleconomicollaps]

Re: China hits the PRINT Button

I wish you would skip the editorializing. There is a very important idea in this article. China is directly attacking the US with steel subsidies. This is the
Smoot–Hawley Tariff. It was the primary cause of the great depression.

Article reproduced in full below.



China prepares vast stimulus as slump threatens Asia
China has ditched its reform strategy and prepared a vast stimulus package as the country’s soft-landing turns uncomfortably hard, with recession warnings flashing across East Asia.
Taiwan and Singapore's economies both contracted in the second quarter.
Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard

7:53PM BST 31 Jul 2012



The bellwether economies of Taiwan and Singapore both contracted in the second quarter. Korea’s industrial output fell in June, while Japan’s manufacturing PMI index fell in July to the lowest since the Fukushima disaster, with the export gauge crashing to recession levels.

“Factory output, new orders and exports all decreased at the fastest rates since April 2011. These are worrying developments given the weakness of global demand,” said Markit’s Alex Hamilton.

While China has ostensibly held up much better, electricity use has been falling in recent months. “Unless the Chinese steel and aluminium industries have discovered how to make do without electricity, it would appear that their growth has virtually ground to a halt,” said Berkeley professor Barry Eichengreen.

China’s president, Hu Jintao, has told officials to brace for economic shocks from abroad, calling for “fiscal and monetary support and efforts to expand domestic demand”.

The city of Changsha has seized the moment, unveiling plans to spend $130bn (£82bn) on roads, satellite towns, and an industrial park – almost 150pc of its GDP.

Guizhou trumped this today, touting an eye-watering investment package of $470bn on transport, energy, infrastructure and eco-tourism over 10 years. It is a staggering sum for a sleepy province with just 35m people.

Nomura said the regions are in a prestige race against each other to claim the highest growth rate, with regulators eagerly switching on the credit spigot once again. The Chinese railways have chipped in with plans to crank up spending by 40pc in the second half of the year.

It is unclear how such projects can be financed. Fitch Ratings said China has already reached the point of diminishing returns from debt-fuelled growth. The economic return on each extra yuan of credit has collapsed from 0.75pc to under 0.4pc over the last five years.

Prof Eichengreen said China’s authorities have abandoned efforts to wean the country off mega-projects, with tell-tale “ghost towns” and “bullet trains running off rails”. “The restructuring agenda is now on hold,” he said.

Full-throttle stimulus may keep uber-growth alive for a while but only at the cost of an ever-more deformed economy, ever more reliant on exports. China’s leaders know the risks. The last credit spree in 2008-10 pushed investment to 49pc of GDP – unprecedented in world history – and is now deemed a policy error by Beijing.

Premier Wen Jiabao has warned that the economy is “unstable, unbalanced, uncoordinated and unsustainable”, but reformers face a tug-of-war with regional party bosses who rely on perma-boom to keep the lid on social protests.

The Politburo has clearly decided to protect jobs whatever the other risks, steering the yuan down 1.3pc against the dollar this year to protect the wafer-thin margins of exporters.

Nomura said Beijing is preparing a 17pc VAT rebate on exports by Chinese steelmakers to divert excess output abroad, exporting China’s “over-capacity crisis” to the rest of the world.

Albert Edwards, for Societe Generale, said this echoes the Asian crisis in the late 1990s when the region flooded the West with goods, transmitting a deflationary impulse through the global system. This time the Asian bloc is a bigger animal, and the West is more fragile.

“The harder the landing in China, the more goods they are going to dump on us. It is political dynamite in the run-up to a US election,” he said. The US has already imposed anti-dumping penalties on Chinese solar companies accused of selling below cost price.

China’s policy shift is bitter-sweet for the West. While new stimulus will help lift the whole world, the mercantilist measures slipped into the mix will add to global woes. Analysts are watching very closely to see which of the two is bigger.

[globaleconomicollaps]

Re: China hits the PRINT Button

http://www.zerohedge.com/news/why-an...age-not-coming

Why Another Major China Stimulus Package Is Not Coming
Tyler Durden's picture
Submitted by Tyler Durden on 07/31/2012 22:33 -0400

When might the government roll out another stimulus? Have local governments already announced major stimulus? Will the economy grow at a much slower pace than targeted by the government if no new stimulus is adopted soon? Could the country/industries/companies survive without another stimulus? These are some of the recent more frequently asked questions.

UBS: Don’t Hold Your Breath for another Stimulus in China

Indeed some market participants seem to be eagerly anticipating or hoping for another stimulus in China, and each day that has passed without a big policy announcement seems to have depressed the market further. While the Chinese government has been very concerned about the economic slowdown and has taken policies to support growth, we would not be holding our breath for another big stimulus. The previous stimulus in 2008-09 did lift growth much higher than otherwise would have been, but the excessive credit expansion also worsened the imbalance in the economy and left serious negative consequences which are still been dealt with today. Chinese government has clearly recognized this and is keen to avoid making a similar mistake this time. Of course, the slowdown in export and in the overall economy is also much milder compared with 2008-09. Importantly, the lack of labour market distress so far has made it less urgent to come up with any big stimulus.

This is not to say that the government has done little or will do little to support growth. Indeed macro policies have changed to supportive of growth since early this year and this has intensified since mid-May. The policies taken so far include fiscal (tax cuts for small businesses, subsidies for some appliances, pension increase, and more spending on social housing), monetary (increase of base money supply through RRR cuts and reverse repos, increase of banks’ lending quota, and 2 interest rate cuts), and credit and quasi-fiscal (easing of lending to the property sector, local government platforms and some sectors, approval and launch of more government investment projects). Among all these, we continue to believe that the measures to increase public investment, to be financed largely by bank credit, will be the most important ones in the near term.

The government has also been trying to encourage private investment in energy, utility, transport and service sectors including by promising easier entry and access to credit, but we think it may take some time before such investment can take off. Most recently, the State Council announced on July 30 that the government will support industrial upgrading including by providing interest subsidies for enterprises to invest in new technology and techniques, more advanced equipment, energy saving process and materials, and advanced information and automation systems. Banks are also encouraged to increase lending to such investment projects.

What about the many “regional stimuli”, including in Changsha and Guizhou? Should we tally up the regional investment plans and count these as stimulus? Not really. While the central government is clearly trying to support growth and investment in the inland regions, we think the many regional stimuli are largely wishful thinking of local governments. The realization of such ambitious investment plans depends crucially on sufficient financing, but banks have been more cautious this time and the overall credit policy is still closely managed by the central government. In addition, the central government’s insistence on not relaxing the property policies wholesale has put limited local governments’ ability to use land/property to finance ambitious investment projects.

Nevertheless, with the continued implementation of the existing pro-growth measures we think GDP growth can still be close to 8% in 2012. In the coming months, we should see bank lending to expand at a steady pace, with the share of medium and long term loans rising gradually, which should help support a modest and investment-led recovery in Q3 and Q4 2012. Industrial profits are down and may continue to be depressed for 1-2 quarters with the ongoing decline in some prices and inventory adjustments, and some companies may not survive this cycle, but we do not foresee major macro risks because of this. Some adjustment and industry consolidation in an economic downturn may not be bad, and many listed companies may emerge from this cycle stronger and more efficient. The ride, of course, may not be pretty.