Reply #24: Beijing 'considers massive stimulus' [View All]

[Ghost Dog]

Beijing - China's government is considering spending up to 400 billion yuan (about R450 billion) to stimulate the economy and may ease monetary policy this year, according to Frank Gong, the head of China research at JPMorgan Chase.

The possible stimulus package would be equivalent to more than 1 percent of gross domestic product (GDP).

"This will include tax cuts and measures to 'stabilise domestic capital markets' and support 'healthy development of the housing market'," said Gong, who correctly predicted in 2005 that China would scrap the yuan's peg to the dollar.

Since last month Chinese policy makers have put extra emphasis on sustaining growth rather than cooling inflation as the outlook for exports dims. Economic expansion has cooled for four quarters and industrial output grew last month at the slowest pace in a year and a half.

"The top leadership is carefully considering an economic stimulus package," Gong said.

He did not cite a source and would not comment further when telephoned.

/... http://www.busrep.co.za/index.php?fArticleId=4567199&fSectionId=613&fSetId=662