China approved plans to build 1,254 miles of roads, spurring the biggest stock- market rally in almost eight months on signs the government is stepping up stimulus efforts to revive economic growth.
The government also backed nine sewage-treatment plants, five port and warehouse projects, and two waterway upgrades, according to statements on the website of the National Development and Reform Commission yesterday…
The Shanghai Composite Index closed 3.7 percent higher, led by construction stocks, on speculation infrastructure spending will help bolster growth that’s cooled to the slowest pace in three years. The announcements came a day after approvals for subway projects in 18 cities, an earlier rise in the railway- building budget and increases in land supplies in cities including Guangzhou, Hangzhou, Beijing and Shanghai.
“They are clearly stepping up the infrastructure-investment push to help boost confidence and revive growth,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc. Premier Wen Jiabao’s policy stance is shifting “to a more proactive and significant easing…”
“China’s central government finally took real actions to arrest the worsening slowdown,” Bank of America Corp. economist Lu Ting said in a note. “Adding home supply and improving urban infrastructure are the two best ways to contain home prices, speed up urbanization and increase social welfare…”
The approvals on Sept. 5 for a total of 25 new subway and inter-city rail projects are worth more than $126 billion, or 1.7 percent of 2011 gross domestic product, according to HSBC. The spending will run from the second half of the year to 2018, it said…
The NDRC backing may accelerate metro-rail developments, most of which were already in local governments’ plans, Citigroup analysts Jenny Zhen and Paul Gong said in a note to clients yesterday.
“This sentiment is positive for the whole railway- construction and equipment sector,” they said…
If you’re interested in the global economy, one of the funniest things you can do is watch Asian Squawk Box on CNBC-World with Bernie Lo. Bernie’s a dyed-in-the-wool Republican and a Baptist to boot. He tries very hard to ask leading question of Asian old hands – to paint China as a failing economy envious of American accomplishments.
I watched him the other night as he tried to press one of the lifers for a typical Wall Street 2-3 month outlook on structural economic changes in China. He got the usual sigh, followed by – you have to learn that China’s economic planners, the government as a whole ignores what the stock market is doing in its various up-and-down joyride. They look to what will achieve the greatest improvement over a 2 to 5 year period. They want to ensure the fullest employment and growth in the nation’s economy – not just a bump that satisfies daytraders and short-term profiteers.
Meanwhile, we sit here in the GOUSA and get to watch alternating panic and euphoria from Biz TV talking heads and politicians who are most expert at blaming someone else – anyone will do – instead of Congressional corporate pimps who are most accomplished at sitting on their hands when they’re not busy picking our pockets.