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19 Aug 2013
China's silent stimulus gathers media attention
FXstreet.com (Barcelona) - A week ago the FXstreet Asian Team reported on a developing story out of China, where local reports suggested China had been secretly providing stimulus to the economy through major commercial banks, with the total amount of 'silent' stimulus equivalent to 12.5% of Shanghai’s GDP last year.
Forbes columnist Gordon G. Chang has more on the story this weekend, saying that "China Development Bank will make large infrastructure loans to three provinces, Hebei, Jiangsu, and Qinghai." Chang adds that "Hebei will use loan proceeds for slum renewal and an airport zone, and Jiangsu’s funds will go to urban infrastructure and the province’s regional transport network." Meanwhile, Qinghai's funds are aimed at roads, railways, and waterways.
But China Development Bank is not the only one receiving large sums of stimulus, with Agricultural Bank of China (Agbank), one of the big four state lenders, having recently signed a 250 billion yuan loan credit to Shanghai's city government.
Chang also comments on growing chatter that other banks will follow suit by making available sizeable loans to indebted governments, with Guangdong province poised to be the most urgent to get new credit flowing.
Chang added that "Yet on-the-ground observers report that the central government has been flooding the economy with money, at least since early July."
J Capital Research’s Anne Stevenson-Yang, cited by Forbes, notes “I don’t think the debate is even about whether or not to stimulate: it’s all about what type of spending to engage in", adding "There is a genuine acceleration in infrastructure spending and many announcements about how the government will accelerate ‘slum renovation,’ water projects, and roads.”
Forbes columnist Gordon G. Chang has more on the story this weekend, saying that "China Development Bank will make large infrastructure loans to three provinces, Hebei, Jiangsu, and Qinghai." Chang adds that "Hebei will use loan proceeds for slum renewal and an airport zone, and Jiangsu’s funds will go to urban infrastructure and the province’s regional transport network." Meanwhile, Qinghai's funds are aimed at roads, railways, and waterways.
But China Development Bank is not the only one receiving large sums of stimulus, with Agricultural Bank of China (Agbank), one of the big four state lenders, having recently signed a 250 billion yuan loan credit to Shanghai's city government.
Chang also comments on growing chatter that other banks will follow suit by making available sizeable loans to indebted governments, with Guangdong province poised to be the most urgent to get new credit flowing.
Chang added that "Yet on-the-ground observers report that the central government has been flooding the economy with money, at least since early July."
J Capital Research’s Anne Stevenson-Yang, cited by Forbes, notes “I don’t think the debate is even about whether or not to stimulate: it’s all about what type of spending to engage in", adding "There is a genuine acceleration in infrastructure spending and many announcements about how the government will accelerate ‘slum renovation,’ water projects, and roads.”