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| Version 4 | Version 5 |
|---|---|
| Stocks surge after China stimulus | Stocks surge after China stimulus |
| (about 5 hours later) | |
| Asian markets have risen sharply, a day after China announced a huge investment plan to kick-start its slowing economy. | Asian markets have risen sharply, a day after China announced a huge investment plan to kick-start its slowing economy. |
| Stocks leapt in Japan, China and Hong Kong, buoyed by China's efforts to sustain its growth rates, on which many Asian economies depend. | Stocks leapt in Japan, China and Hong Kong, buoyed by China's efforts to sustain its growth rates, on which many Asian economies depend. |
| About $586bn (£370bn) is to go into housing, infrastructure and post-earthquake reconstruction in China over the next two years. | About $586bn (£370bn) is to go into housing, infrastructure and post-earthquake reconstruction in China over the next two years. |
| Correspondents say the package is a response to falling growth and exports. | Correspondents say the package is a response to falling growth and exports. |
| There will also be significant cuts in company tax, while banks will be allowed to lend more to projects involving rural development and technical innovation. | There will also be significant cuts in company tax, while banks will be allowed to lend more to projects involving rural development and technical innovation. |
| The government also promised a shift to a "moderately easy" monetary policy. | The government also promised a shift to a "moderately easy" monetary policy. |
| "The investment expansion should be done swiftly and forcefully," a State Council meeting chaired by Premier Wen Jiabao concluded. | "The investment expansion should be done swiftly and forcefully," a State Council meeting chaired by Premier Wen Jiabao concluded. |
| "It's a huge package," Dominique Strauss-Kahn, managing director of the International Monetary Fund, was quoted as saying by the Reuters news agency after a meeting of the Group of 20 finance officials in Sao Paulo, Brazil. | "It's a huge package," Dominique Strauss-Kahn, managing director of the International Monetary Fund, was quoted as saying by the Reuters news agency after a meeting of the Group of 20 finance officials in Sao Paulo, Brazil. |
| "It will have an influence not only on the world economy in supporting demand but also a lot of influence on the Chinese economy itself, and I think it is good news for correcting imbalances." | "It will have an influence not only on the world economy in supporting demand but also a lot of influence on the Chinese economy itself, and I think it is good news for correcting imbalances." |
| Market bounce | Market bounce |
| Chinese stocks rose sharply, with the Shanghai Composite Index ending 7.3% higher at 1,874.80. | Chinese stocks rose sharply, with the Shanghai Composite Index ending 7.3% higher at 1,874.80. |
| Chinese exports have been a key driver of the economy | Chinese exports have been a key driver of the economy |
| Tokyo's Nikkei 225 stock average closed up 5.8% to 9,081.43, helped by the weaker yen, while Hong Kong's Hang Seng Index was up 3.39% at 14,726.59. | Tokyo's Nikkei 225 stock average closed up 5.8% to 9,081.43, helped by the weaker yen, while Hong Kong's Hang Seng Index was up 3.39% at 14,726.59. |
| European shocks were also given a lift by the Chinese news. | |
| The UK's FTSE 100 index ended the day up 38 points or 0.9% to 4,404, while Germany's Dax advanced 87 points or 1.8% to 5,026. | |
| However, BBC Shanghai correspondent Chris Hogg said much uncertainty remained over the details of the package, and US stocks were lower by afternoon trading in New York. | |
| "What's not clear is how much of the sum announced is new money, in addition to current budgets," he said. | "What's not clear is how much of the sum announced is new money, in addition to current budgets," he said. |
| "And we don't know how the total money will be divided up between the different spending proposals and plans for tax relief". | "And we don't know how the total money will be divided up between the different spending proposals and plans for tax relief". |
| Companies likely to benefit most from the government's investment plans did best, including banking, steel and construction firms. | Companies likely to benefit most from the government's investment plans did best, including banking, steel and construction firms. |
| Factory closures across the border in southern China have badly depressed China's manufacturing sector. | Factory closures across the border in southern China have badly depressed China's manufacturing sector. |
| Commodity cuts? | Commodity cuts? |
| Analysts said the stimulus package would not save China from the effects of the global financial slowdown, but could help to protect it. | Analysts said the stimulus package would not save China from the effects of the global financial slowdown, but could help to protect it. |
| China, and Asian economies who increasingly depend on it as an export market, had become used to double-digit growth figures. | China, and Asian economies who increasingly depend on it as an export market, had become used to double-digit growth figures. |
| But in the third quarter of this year growth slipped to 9%, its lowest level in five years. | But in the third quarter of this year growth slipped to 9%, its lowest level in five years. |
| Though this might be considered healthy elsewhere, the fall has been taken as a worrying sign in China where the government has relied on rapid growth to maintain political stability. | Though this might be considered healthy elsewhere, the fall has been taken as a worrying sign in China where the government has relied on rapid growth to maintain political stability. |
| Interest rates | Interest rates |
| The Chinese government has cut interest rates twice in recent weeks, and began considering ways to avert a more dramatic economic slowdown in October. | The Chinese government has cut interest rates twice in recent weeks, and began considering ways to avert a more dramatic economic slowdown in October. |
| These included measures to stimulate the property market, prompt construction of low-cost housing, and increasing export rebates on thousands of products. | These included measures to stimulate the property market, prompt construction of low-cost housing, and increasing export rebates on thousands of products. |
| Figures on Monday showed wholesale price inflation fell in October, which analysts said made the chance of another rate cut more likely. | Figures on Monday showed wholesale price inflation fell in October, which analysts said made the chance of another rate cut more likely. |
| Producer price inflation declined to 6.6% in the 12 months to October from 9.1% in September, according to the National Bureau for Statistics. | Producer price inflation declined to 6.6% in the 12 months to October from 9.1% in September, according to the National Bureau for Statistics. |
| "Monetary policy is completely free to act to counter to any downside risks," said Ken Peng, an economist with Citigroup in Shanghai. | "Monetary policy is completely free to act to counter to any downside risks," said Ken Peng, an economist with Citigroup in Shanghai. |
| "It's still necessary for monetary policy to complement the fiscal package." | "It's still necessary for monetary policy to complement the fiscal package." |
| President Hu Jintao is to travel to Washington later this week for a global economic summit meeting. | President Hu Jintao is to travel to Washington later this week for a global economic summit meeting. |