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José Ruiz Varela, with academic training in Fundamental Mathematics and professional experience in Large Multinationals in the Information Technology sector, having held positions in high-level management positions, maintains that it is time to reduce Unproductive Public Expenditure and help the Private Sector in everything that is possible.
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JPM: China local government stimulus ‘castles in the air’

The nearly 19 trillion yuan ($3 trillion) investment plans announced by Chinese city and provincial authorities since May may be nothing but “castles in the air,” say J.P. Morgan economists led by Haibin Zhu
In a rather strongly worded report, the analysts noted that Chinese economic growth is widely expected to drop below the 8% level for the slowest pace this century
But the 18 investment plans announced by local authorities since then will only have a moderate impact on the near-term growth outlook, and may not be as effective as the 4 trillion yuan stimulus Beijing announced in late 2008, they say
Here are the reasons in the analysts’ words:
One: “There has been no official endorsement of these projects by the central government.”
Two: “Note that the timing of these announcements coincides with the transition of leadership at the local level. The long-term orientation in part explains the large magnitude of the investment plans.”
Three: “Some announced projects are too ambitious to be feasible.”
And four: “Without significant easing in fiscal budget and [local government financing vehicle] loan policy, the available funding capacity of local governments can finance sufficient investment to provide a modest boost to growth, but won’t be able to drive a rebound in economic growth as was observed in 2009.”
– V. Phani Kumar

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