The new plan, widely discussed in the Chinese media but not formally announced at the time of going to press, would focus on promoting domestic consumption rather than infrastructure development.
Details of this new plan, including the likely total to be spent, remain unclear but both this package and the previously announced infrastructure spending are being closely monitored because the health of the Chinese economy is seen as vital to the global battle against recession. Yiping Huan and Ken Peng, analysts at Citi, summarize this view in a note published on November 24. "The rationale for [the new stimulus package] seems clear – the policymakers hope to provide stronger support to consumption," they write. "Two weeks ago, the State Council announced a massive Rmb4 trillion fiscal stimulus package, concentrating on infrastructure development. That package should have a direct impact on growth performance. We believe it is necessary at a time...
