China announces mini-stimulus to keep economy on even keel

|By:, SA News Editor

China's State Council has unveiled another mini-stimulus package as part of an attempt to stabilize slowing growth even as the government looks to reform the economy so that it relies less on the state sector.

"There's a balance," says Mark Williams of Capital Economics. "The leadership wants to push ahead with reform, but it's aware that it has to maintain confidence."

The program includes selling 150B yuan ($24.6B) in bonds for railway construction and creating a development fund of 200-300B yuan a year for a similar purpose, improved housing for those on low incomes, and tax relief for struggling small companies.

The measures had already been announced but not as a package to boost GDP, while the program is a bit of a re-run of a mini-stimulus that China introduced last year to lift flagging growth.

The State Council didn't say whether monetary policy would be loosened - the dilemma for the government is that it's also trying to rein in soaring lending.

State Council statement

Meanwhile, China's official non-manufacturing PMI slipped to 54.5 in March from 55 in February, while the HSBC services PMI rose to 51.9 from 51.

The Shanghai Composite is -0.95%, while the Hang Seng is +0.2%.

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