China economy: As Beijing rolls out stimulus measures, some wonder if the bull market is a deliberate ploy to restore confidence

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Economic growth is sluggish and youth unemployment is at socially precarious levels. But is recent stimulus designed to simply pump up sharemarket sentiment?

But at least one analyst is asking: “What if the whole point of the stimulus is to juice up the stock market in the hope that the economy follows suit?”With economic growth sluggish all year and youth unemployment at socially precarious levels, Beijing has recently shifted from doing little to announcing and executing a series of monetary and stimulus measures designed to pump liquidity into the economy and get people spending again.

Gave suggests there are two distinct but deeply unhappy cohorts in China. The first is older people living in rural areas, left behind by rapid urbanisation and industrialisation. And those living in China’s third- and fourth-tier cities have enjoyed waves of public infrastructure improvements. High-speed rail links and improved healthcare supplement the job opportunities linked to China’s industrial boom.

Thankfully, he has a data point. A few months ago, Chinese authorities capped salaries in the finance industry at $US420,000 . At the time, most chalked up the decision to Xi’s underlying Maoism. Investors wanting to get a slice of this next Chinese wave will need to get their hands dirty and own China itself.

 

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