Kanye West concerts are one way to get the Chinese economy moving, but giant stimulus packages are even more effective.
Driving the news: Chinese stocks had their best week since 2008 after the central bank unveiled its biggest stimulus package since the pandemic. And as China tries to resuscitate its flagging economy, the government is promising more economic stimulus to come.
- The main plank of the stimulus package is a US$114 billion lending pool that companies, asset managers, and brokers can draw on for stock buybacks and to purchase equities.
- The government followed that up by announcing it would give cash handouts to the poorest members of the population ahead of a week-long public holiday next week.
- Rounding out the package are measures to re-inflate property prices and boost consumption, including restrictions on the construction of homes and a $284 billion special bonds issuance.
Why it matters: These moves have other economies feeling the stimmy, too. The promise of increased Chinese consumption lifted indexes globally — including the TSX, which broke 24,000 for the first time — as everything from the materials sector to luxury goods surged.
Yes, but: Some analysts are skeptical about the long-term impacts of China’s stimulus and doubt it can buoy the global economy like its massive 2008 package did. In fact, it might not even be enough to get China to its goal of 5% annual GDP growth.—QH