chinas-underdeveloped-bond-market-hinders-fiscal-stimulus

China's underdeveloped bond market hinders fiscal stimulus

A more vibrant corporate bond market would also improve financing conditions for SMEs and provide companies with an alternative financing channel when the banking system is under stress, argues S&P.

China's massive Rmb4 trillion $585 billion fiscal stimulus package, unveiled in the fourth quarter of 2008, was at the time widely regarded as a sign that the government was playing safe by providing an ample cushion for the economy. Now the package seems barely enough to keep economic growth at a decent rate in 2009 and a second stimulus is reportedly at the planning stage. If not for the government's early and forceful push, it is unlikely that real GDP growth will reach anywhere near the 6.5% rate that Standard Poor's expects this year.

As large as Rmb4 trillion seems, it is only 13.3% of China's economy in 2008 and it is to be spent...

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