The Stimulus Package Used By The Chinese Government And Central Bank In 2014 Was Similar To What They Did In Early

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Don’t say stimulusj The government tries to temper a slowdown, surreptitiously jun ‘Ith 2014 1WITH the Chinese government still trying to slow credit growth after releasing a
flood of lending from state-owned banks in Zflfl’ét, stimulus is a toxic word in Beijing. From the prime minister on down, the official line has consistently been
that China neither needs nor wants another stimulus, and that the focus is instead on reforms to put the slowing economy on a stable footing for the long
run. S=o it was notable last month when lIIIhen Donggi, vice-head of a governmental
research institute, chose the term quot;mini stimulus to describe the array of
adrenalin shots that the state has started administering to the economy. The fear
is that the cooling property market, in particular, will pull growth below the
official goal of quot;about 15%quot;. Independent commentators have previously
referred to a mini stimulus, but M; Chen was hailed as the first person speaking
in an official capacity to define the policy stance as such. It appears to have been
a slip-up. The cabinet, the central bank and top policymakers have still managed
to keep the dreaded phrase from crossing their lips. But who can blame M; Chen? Virtually every week since early April, the
government has introduced—often publicly, sometimes not—new measures to
encourage investment and prop up growth. The first came in early April when
the cabinet announced a small batch of fiscal initiatives, including investment in
railways, spending on public housing and tax breaks for small businesses. By
themselves, these would not have been enough to arrest the economy’s
slowdown, especially as the property market, a critical growth engine, has
sputtered. But the government has steadily added to its initial package. It has pledged to
invest yet more in railways and is now aiming for BUD billion yuan [$128 billion]
this year, a fifth more than last year. It has launched big water-management
projects. And it has taken the unusual step of urging local governments to speed
up implementation of their spending commitments. Most potently, the central bank has also been drafted into the effort. After
resisting calls for nearly a year to ease monetary policy, the People’s Bank of
China has quietly taken several stimulative steps. It began by injecting cash in Economics