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S&P: China can afford another big stimulus
By Wang Yanlin |
August 22, 2012, Wednesday
|
Online Edition
Online Edition
CHINA can afford another big stimulus but doesn't need it at the moment despite growing economic tensions, a report by Standard & Poor's Ratings Services said today.
China has not introduced another large stimulus program this year, but it remains an option if conditions sharply deteriorate, the report said.
"The government retains significant capacity to support economic growth, partly because of China's sizable financial assets," S&P's credit analyst Kim Eng Tan said.
The government may be prepared to pump money into the economy if the currently stable unemployment rate rises steeply, the report said, adding the firm expects an economic growth of 8 percent this year and 8.2 percent next year.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, a three-year low and the first time it fell below 8 percent in more than two years.
Although the central government did not orchestrate stimulus efforts to stabilize the economy, local governments have rushed to unveil new investment plans to shore up people's confidence.
Tianjin, a municipality in north China, released a multi-year industrial investment target of 1.5 trillion yuan (US$236 billion) on Tuesday, after Chongqing in west China and Ningbo in east China made similar moves.
The central government is cautious of rolling out another massive stimulus program as the one in 2008 has led to persistent high inflation and excessive production capacity.
China has not introduced another large stimulus program this year, but it remains an option if conditions sharply deteriorate, the report said.
"The government retains significant capacity to support economic growth, partly because of China's sizable financial assets," S&P's credit analyst Kim Eng Tan said.
The government may be prepared to pump money into the economy if the currently stable unemployment rate rises steeply, the report said, adding the firm expects an economic growth of 8 percent this year and 8.2 percent next year.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, a three-year low and the first time it fell below 8 percent in more than two years.
Although the central government did not orchestrate stimulus efforts to stabilize the economy, local governments have rushed to unveil new investment plans to shore up people's confidence.
Tianjin, a municipality in north China, released a multi-year industrial investment target of 1.5 trillion yuan (US$236 billion) on Tuesday, after Chongqing in west China and Ningbo in east China made similar moves.
The central government is cautious of rolling out another massive stimulus program as the one in 2008 has led to persistent high inflation and excessive production capacity.
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