Wed, Oct 09, 2024 page12

• China’s stimulus plan disappoints

  • AP, HONG KONG
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  China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives.

  The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent.

  Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition to another 100 billion yuan for construction projects.

  

  Pedestrians cross a street in Beijing yesterday. China said it is confident of reaching its economic targets this year and promised to further support growth, although it held back in unleashing more major stimulus in a disappointment to investors looking for more fuel for a world-beating stock rally.

  Photo: Bloomberg

  The scale of spending overall was well below the multitrillion yuan levels that analysts said might be expected.

  Zheng said China was still on track to attain its full-year economic growth target of about 5 percent, but he acknowledged the economy faces difficulties and an increasingly “more complex and extreme” global environment.

  In a note, UBS chief China economist Wang Tao (王濤) said that the market was “likely expecting a significant fiscal stimulus.”

  A modest package of 1.5 trillion to 2 trillion yuan is more reasonable to expect in the near term, she said, with another 2 trillion to 3 trillion yuan next year.

  Late last month, China unveiled a monetary stimulus package including cuts to mortgage rates and in the amount of reserves required to keep on deposit with the central bank.

  Those and other measures were the most aggressive efforts so far to try to pull the property industry out of the doldrums and spur faster growth.

  The commission said the new measures would focus on boosting investment and spending, and supporting small and medium-sized businesses that operate at a disadvantage to large, state-corporations.

  However, much of the information focused on technical issues, such as payment regulations, management of projects and deployment of bonds for financing.

  Separately, Chinese drinkers might have to pay more for Remy Martin and other European brandies after the government yesterday announced provisional tariffs of 30.6 to 39 percent on those liquors, four days after most EU countries approved duties on China-made electric vehicles (EVs).

  The tit-for-tat move potentially gives Chinese negotiators leverage in talks with the EU on reducing or eliminating the tariffs of up to 35.3 percent on Chinese EVs, which take effect at the end of this month.

  The brandy tariffs are provisional and require importers to make a deposit with the Chinese customs for the amount of the tariff, starting on Friday.

  The announcement followed a preliminary finding by the Chinese Ministry of Commerce in late August that European brandy was being dumped in China, threatening “substantial damage” to domestic producers.

  The brandy probe mainly targeted French makers of Cognac and similar spirits such as Armagnac. France has supported the investigation into Chinese-made EVs, while Germany, whose automakers fear retaliation in the Chinese market, has opposed it.

  The provisional tariffs vary by brand, similar to the EU duties on EVs made in China. For example, Martell products face a 30.6 percent tariff versus 38.1 percent for Remy Martin and 39 percent for Hennessey.

  The tariffs are being imposed on dozens of companies, including some Spanish producers.
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