Just as Goldman Sachs was seen as providing a ray of light for Wall Street, optimists are busily touting China as a spot of cheer in a recessionary world. Sure, the world's third-biggest economy unveiled a further slowing in economic growth, to 6.1 per cent in the first quarter over the year-ago period. But that marks a stabilisation of sorts, with the deceleration in annual growth rates falling sharply. Better still was the accompanying slew of perky March data. Ecstatic analysts spent Thursday pencilling in “V” shaped graphs.
Some hopefulness is justified. Beijing's willingness and ability to spend its way out of the slowdown are shown clearly by March's 30 per cent increase, year on year, in urban fixed-asset investment.
Banks, under government orders, are lending furiously. M2 money supply is growing at a record clip. Lending is up 30 per cent. And fiscal spending has a better record in China than, say, Japan. The World Bank reckons that the country's $100bn fiscal stimulus of 1998-2002, worth 7.8 per cent of 1998 gross domestic product, prompted four times as much in other government-influenced investment.