China may not announce new stimulus plan soon - analysts

14 April 2009 12:37  [Source: ICIS news]

SHANGHAI (ICIS news)--China will not unveil a second economic stimulus package in the near term as its earlier one is still taking effect with some signs of a recovery evident, analysts said on Tuesday.

China’s cabinet State Council was due to discuss whether to implement a new stimulus plan in a working conference on Wednesday, according to local media reports, but analysts thought this was unlikely.

“I don’t think the government will release the additional new stimulus package so fast as many figures show China’s economy is recovering,” Huang Feng, an analyst from Bohai Securities, said.

The new package was said to affect nine sectors including medical, agriculture, new energy, real estate, bank, home application, automobile, textile and electronic information.

The Purchasing Management Index (PMI) of China’s manufacturing industry rose for the fourth consecutive month to 52.4% in March, an increase of 3.4 percentage points from February and the first time it had gone above above 50% since July 2008, according to data from the China Federation of Logistics and Purchasing (CFLP) in early April.

“The recovery was now noted evidently in the first quarter as many sectors saw a rebound. The earlier stimulus needs much more time to get perfect effect, so we think the second one should not be planned at present,” said another analyst from Guotai Junan Securities.

“The earlier four trillion [yuan (CNY) 4,000bn/$584bn] stimulus package has already been showing some effects, so the government will not be in a hurry to unveil new policies,” Li Hongrong, an analyst from Shenzhen-based Ping An Securities, said in Mandarin.

China’s Premier Wen Jiabao said in his latest governmental report: “The government should now put all efforts to implement the policies and measures of the existing stimulus package. We believe that the effects are now reflecting China’s economic recovery.”

With the earlier stimulus package, announced in November last year, the Chinese economy was expected to bottom out by the middle of this year, the World Bank said in a report early April.

If the government released its new stimulus plan later, it would focus on how to drive consumption, the analysts said.

Judith Wang contributed to this article
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