Stock markets are mixed after Beijing stopped short of announcing fresh measures to bolster growth.
Asia stocks mixed as China stimulus rally fades
HONG KONG // Asian stocks markets were mixed today after Beijing stopped short of announcing fresh measures to bolster growth, dimming hopes China would emerge as a white knight for the staggering world economy. Chinese prime minister Wen Jiabao said the government's 4 trillion yuan (US$586 billion) stimulus plan - announced last November - would help the country achieve eight per cent growth this year. That rate is seen as critical to creating jobs and staving off social unrest as the worst global economic crisis in generations hits Chinese exports.
As the government boosts money for infrastructure, social programmes and tax cuts, the country's budget deficit will surge to its highest level in six decades, Wen said at China's annual legislative session in Beijing. Global markets had rallied the day before, partly on hopes China would announce new steps to bolster its economy and help other countries restart theirs in the process. But Wen's nationally televised speech, while supplying a short-term jolt to confidence with its reiteration of the eight per cent growth target, was unlikely to bring about a lasting recovery in global equities markets, analysts said.
With Western economies and the global financial system still in tatters, the spillover effects from China would be limited. "Knowing China will be spending is comforting, but we have doubts whether this will help other countries' economies in the end," said Kelvin Lau, a regional economist at Standard Chartered Bank in Hong Kong. After opening higher, Asian stocks started to pare their gains by the afternoon as many investors booked profits from Wednesday's rally.