China’s economy grew 6.4% in the first quarter versus the same period last year, better than most analysts expected. The main take: that the government has shifted from worrying about deleveraging to stabilising growth.
Similar thinking has been stirring speculation that Beijing is poised to launch another round of measures to boost local consumption. The country’s carmakers are especially hopeful of larger quotas for licence plates in major cities for new buyers, for instance, as well as subsidies for people who exchange older cars for electric or hybrid vehicles. Rural sales subsidies for home appliances costing less than Rmb800 ($118) are also said to be under consideration, plus a plan for trading in older smartphones for new ones.
Stocks then fell on Tuesday after comments from President Xi Jinping about “structural deleveraging” were taken to mean that new stimulus measures weren’t such a sure thing after all. The National Development and Reform Commission, the nation’s economic planning body, even took the unusual step of downplaying a draft of the measures that had been doing the rounds, telling state television that “repeated research” was required first.
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