China hints at potential stimulus, but will it follow through? (Part 2)

Market Realist

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Saving face

Another issue to consider is that providing stimulus would likely make the government look indecisive. It may also give the impression of weakness if it seems that the government has yielded to investor demand for stimulus. Nonetheless, recent statements may be a setup for potential stimulus.

(Read more: Why recession in Brazil is not imminent, but the short term will hurt)

Stimulus targets

Zhang also mentioned that China’s growth remains within the target range, but also said, ”We must take decisive fiscal, financial and pricing measures to support reasonable infrastructure investment, social welfare projects, the services sector, exporters and small- and medium-sized firms.” This means that key infrastructure development will continue, consumer demand will be supported, and exporters won’t be neglected. Small- and medium-sized firms may be supported by increasing the credit available to them, which has seen a pinch in recent months.

For what will trigger the stimulus, continue to Part 3.

(Read more: Brazil’s Q2 starts stronger than expected, but can it keep it up until year end?)

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