Use it or lose it!

BEIJING, Sept 14 (Reuters) - China's finance ministry on Monday ordered local governments to use money allotted to them under a 4 trillion yuan ($585 billion) stimulus package quickly and efficiently, or else risk losing out on future spending.

The central government could "delay or cut" further allocations of money to those provincial governments that do not use their existing stimulus funds appropriately or do not raise enough of their own funds to complete the projects, the ministry said in a statement on its website (www.mof.gov.cn).

The move aimed to "ensure that projects backed by the central government get started in time and that budgeting for them is accelerated, in order to achieve our strategic goal of expanding domestic demand and promoting economic growth," it said.

Click here to access the full article from Reuters

Asia News Wire

India's central bank cuts key rates by 25 basis points -- ChannelNewsAsia

MUMBAI: India's central bank on Tuesday lowered two key short-term interest rates by 25 basis points each, in an effort to arrest a slowdown in Asia's third largest economy.

The Reserve Bank of India (RBI) lowered the repo – the rate at which it lends to commercial banks – to a record low of 4.75 per cent, from a peak of 9.0 per cent seen last year.

It also announced a cut in the reverse repo – the rate at which it borrows from banks – to 3.25 per cent.

"The major challenge at this stage is to support drivers for demand, to enable the economy to return to a high growth path," RBI governor D. Subbarao said in the annual policy statement for the year to March 2010.

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Hong Kong's composite interest rate falls to 0.29% -- China Securities Journal (CSJ)

Hong Kong's composite interest rate fell to 0.29 percent at the end of March from 0.33 percent at the end of February, the Monetary Authority of Hong Kong said on Tuesday.

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China to launch more stimulus investment in Q2 -- China Securities Journal (CSJ)

The Chinese central government is expected to launch its third batch of stimulus investments in large domestic projects in the second quarter to further boost its economy, according to the China Securities Journal Tuesday, citing an unidentified source.

The central government has so far cashed in a combined 230 billion yuan (33.8 billion U.S. dollars) for its 4-trillion-yuan stimulus package announced last November to bolster the slowing economy, 100 billion yuan in the fourth quarter and 130 billion yuan in the first quarter.

The newspaper said the new money would continue to be poured in projects that could benefit people's livelihood, such as health and education sectors, big infrastructure projects, and housing for low-income earners. Previous investments were dedicated to similar purposes.

An official of the National Development and Reform Commission (NDRC) confirmed the new investment, but said the exact amount was not decided yet. He spoke to Xinhua Tuesday morning on condition of anonymity.

FDI into China declines for the 6th month straight

Not good news on the heels of already mixed messages emerging from the stimulus passed a few months back.

Even if China's stimulus can get the domestic economy going, it alone will not be enough to bring it out of recession... no less help the global economy economy get back on its feet as many hope.


According to this Bloomberg article:

FDI has dropped 9.5% to $8.4 billion from a year earlier.

Month wise, February FDI dropped 15.8% in February.

Consumer spending fell 20.6% percent to $21.8 billion.


“Foreign direct investment will continue to drop in the coming months as multinationals face a continued credit crunch and a deeper world recession,” said Lu Zhengwei, a Shanghai- based economists at Industrial Bank Co. “Investors will remain cautious until the world economy and consumer demand recover.”

China’s government said last month it will simplify approvals for overseas capital entering the nation by giving local governments more authority to approve such spending.


In response the Chinese government is planning:

To continue providing liquidity to ensure loan growth in order to keep demand flowing (click here to read more about China's surging loans)

Rural-sales programs through the provision of billion yuan ($2.9 billion) in subsidies for rural consumers buying electronics, home appliances, cell phones and other commodities. The government hopes this will allow the economy to tap into a very unexploited consumer market, numbering hundreds of millions of people.

If China could get the rural economy going it would be a great move for macro economy in the long term. When I was studying rural economics a continuous theme presented by the government was their hope the rural areas of China would develop in response to migrants sending money home and bringing a sophisticated mentality back when they visit or move home.

China is also counting on its rural population of 350-600 million to enter the mainstream economy.

Buy goods and services. Pay taxes to build their own new roads and schools. Rent empty apartments. Save their money in Chinese banks. Buy Chinese stocks. Basically to help in increasing China's GDP and overall level of development..

China bucks car sales trend - Reuters

Apr 10 (Reuters) - China, the world's largest car market, has seen another record high in car sales in March.

Andrew Potter reports.

What to Make of March's Mixed Signals? -- Caijing Finance News

Shen Mingga, Chief economist of Caijing shares his thoughts on the Chinese economy and what to make of economic data from March.

Is China's stimulus working? Shen Mingga seems to think so, at least in certain sectors. There aren't many truly incredible China focused finance sites. Caijing stands on top with a handful of good ones, excluding the big names like Reuters or Bloomberg.


Click here to access his interview from Caijing.

He's worth your time listening to