Chinese Economic Stimulus Boosts Stock Market
Yesterday, the Chinese government announced that it will be providing a $586 billion economic stimulus package. Like the rest of the world, China has been seeing some slowed economic growth. And the Chinese government, like other governments in the world, is determined to do what it can to stimulate the economy and try to limit the effects of what is now being seen as a global recession. As a result of China’s action, the stock market is getting a boost today.
China takes the lead in economic stimulus
The Chinese economic stimulus package puts it squarely in the lead for the race to spend the most on preventing recession (or even depression). Stock Trading To Go has a handy list of the three contenders for the top spot, after China:
- U.S.: $168 billion.
- Japan: $51.5 billion.
- Germany: $29.9 billion.
You can see that, combined, the next three don’t even come up to half of what China expects to spend over the next two years on economic stimulus. (It should be noted that the $700 billion bailout passed in the U.S. does not *count* as stimulus money. It is considered rescue money. Which, in thought of as different. I’m not sure how, but there you are.)
Of course, this means that the U.S. will be under more pressure to pass another stimulus package here. While some say that at least $100 billion will be needed, chances are that another package would be closer to $300 billion.
Stock market confidence and economic stimulus
The fact that world’s next economic superpower is entering the economic stimulus fray is helping to boost the stock market. There is increasing confidence that governements around the world are unwilling to let markets fail, and this is buoying the U.S. stock market as well as other markets. Indeed, Asian markets closed significantly higher today, and there seems to be deterimination amongst U.S. investors that the stock market here will follow suit.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
November 10th, 2008 at 10:32 am
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