More details on what prompted Beijing to produce a half-trillion dollar stimulus package:
Ever since it reported sharply slower economic growth in the third quarter (9% vs. 10.4% for the first half) China’s top officials have been signaling that an economic stimulus package was coming to boost domestic demand and that the tight monetary policy imposed earlier this year would be eased.
Let me get this straight. China’s growth slowed from “Freakin’ Spectacular” all the way down to “Still Freakin’ Spectacular” and this is what has Beijing spooked into opening the financial floodgates? Red China may be weaker than I thought.
Either the numbers coming out of Beijing are fake — and have been for years or decades — or the Chinese bubble needs to keep growing at double-digit rates lest it go pop. Or some combination of the two.
There’s a third option I almost missed: China’s internal migration situation. Every year, millions of poor Chinese from the interior make their way to the coastal cities in search of work. Without enough new jobs, China risks revolt (already going on in some places, but quickly repressed and suppressed) or outright revolt. To avoid the latter, half a trillion dollars (of our money!) probably seems downright cheap.