ECONOMISTS IN CHINA are set to put the country back on a faster growth track with a 10 trillion yuan (US$1.4 trillion) injection of funds, Reuters reported yesterday.
While details remain unconfirmed, the decision to go ahead with the plan is set to be decided next week, the news outlet said, citing two sources. Most of the cash, six trillion yuan, will be spread through the country to put local governments into a stronger position, the sources said.
A further four trillion would be issued as bonds through which buyers can obtain property or land.
TRUMP BOOST
The 10 trillion yuan sum would be increased if Donald Trump wins the US election—given his promise to slap massive tariffs on all goods from China, the sources said.
The money would be issued in the form of debt, which can be purchased through a special treasury, and as local government bonds. The project stretches over three years. Investment bankers were aware that a large stimulus package was likely, but this is the first time numbers were attached to the rumours.
DECISION NEXT WEEK
Top finance officials are due to meet in Beijing from Monday to Friday next week (Nov 4 to 8), and are expected to issue a statement on the final day.
China’s bankers issued a stimulus package in September, causing a massive wave of interest from foreign investors, and earlier this month said that further monetary input would follow.
TOO GOOD AT SAVING
One challenge in China is that people are just too good at saving—unlike residents in some other countries, who are happy to rack up credit card debt.
While this indicates the general carefulness of Chinese people, it also means money circulates more slowly in society, making short term capitalist growth harder to achieve.
One idea being discussed at government level is to offer enticements to residents to upgrade the goods in their homes and workplaces.
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Graphic at the top by fridayeveryday.