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China stimulus may be CNY 2 trillion

Credit Suisse Group AG said that the Chinese government’s stimulus in response to the nation’s economic slowdown will probably be as high as CNY 2 trillion, half the size of 2008’s package,

Mr Tao Dong a Hong Kong based economist said in a research note that the government actions will aid a rebound in growth that may slow to 7% or slightly below this quarter.

He said “These policy stimuli can hold the slide in growth and investment demand, but probably not enough to stage a 2009-style rebound. The central government is likely to play a bigger role in funding, in contrast to last time in 2009 where the local governments relied on bank lending for funding almost entirely.”

He said “The government’s efforts may help lift expansion in the second half to a range of 8% to 8.6%.”

Premier Mr Wen Jiabao has vowed to focus more on increasing growth after trade and domestic demand were below forecasts in April, data that prompted economists to pare outlooks for the world’s second-largest economy.