Nikkei Outlook

China may avoid using stimulus: state media ....

By MarketWatch

BEIJING--China is unlikely to turn to stimulus measures to boost its economy even in the face of slower economic growth, a commentary in a newspaper backed by the official Xinhua News Agency said Tuesday.

" The markets have unrealistic expectations for government stimulus," the commentary in the Economic Information Daily said.

It went on to say markets will likely be disappointed by the lack of stimulus even though Premier Li Keqiang has suggested that growth below a " bottom line" might trigger a shift in policy.

China's economy grew 7.5% on-year in the second quarter, down from 7.7% in the first quarter and 7.9% in the fourth quarter of 2012. The growth rate, while continuing a slowing trend, was in line with the government's target for the full year.

The premier has said economic growth -- and employment -- around current levels are generally acceptable.

The government wants to pursue economic restructuring that will reduce reliance on state investment and boost domestic consumption as a driver of growth, but its plans likely mean a less robust expansion in the near term.

China could inject liquidity into the economy, but that would add to inflation and create asset bubbles due to sluggish downstream demand, the commentary said.

The commentary was critical of the 4 trillion yuan ($645 billion) stimulus program launched after the financial crisis, saying that while its stimulative effects were felt for about one year, it has had a negative impact since.

Many economists contend that the stimulus, which may have been much bigger than the headline figure, led to investments in poorly conceived and wasteful projects that could saddle the banking system with bad loans. The commentary said a higher tolerance for slower economic growth could force local governments to accelerate reforms and reduce reliance on investment-driven economic expansion.

 

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China's economy slows for second straight quarter ....

China's economy grew an annual 7.5% in the second quarter of the year, bang in line with market expectations, but down from 7.7% in the first three months of the year and marking the second straight quarter of slowing growth.

The numbers appeared to ease concerns about the outlook for the world's second biggest economy after a string of recent weaker-than-expected economic numbers had some traders anticipating weaker-than-expected GDP data.

Chinese stocks were up a touch firmer after the GDP release, while the China-data sensitive Australian dollar hit a session high of about $0.9109.

" This is the first time we've seen some degree of stabilization but where growth ends up is anyone's bet. Who knows if the 7.5% growth rate is sustainable," Simon Warner, head of macro markets at AMP Capital, told CNBC Asia's " Cash Flow."

" We do have a situation that nobody knows what's going to happen to Chinese growth in the coming quarters," he said.

In a statement, the China statistics bureau said economic performance in the first half was stable, with economic indicators within a reasonable range.

Other data released at the same time as the second-quarter GDP numbers showed June industrial output rose 8.9% from a year earlier, compared with analyst expectations in a Reuters' poll for a 9.1% increase.

June retail sales rose 13.3% from a year earlier, versus expectations for a 12.9% rise.

 

 

China news agency corrects 7%-growth comments ....

Xinhua amends report that finance minister warned of miss for GDP

Japan stocks fluctuate Fast Retailing slides

Bank of Japan Gives Markets Exactly What They Need ....

A lack of action from the BoJ may not be what the markets want, but some analysts argue that a consistent central bank is exactly what the markets need right now.

The bank voted to maintain its pledge of increasing base money unchanged at an annual pace of 60 trillion to 70 trillion yen ($600-700 billion) on Thursday, and said Japan's economy is starting to " recover moderately," using wording not used by the bank since January 2011, Reuters reported.

" You want consistency, you don't want erratic movement. They will double the balance sheet, they will continue to pump up liquidity and things are going well, so stay the course," said Jesper Koll, head of Japanese equity research at JPMorgan Securities in Japan.

The Nikkei  traded down 0.6% immediately after the announcement, but Koll said the dip was a short-term reaction.

" In the short-term there are some traders that will be disappointed by this, but earnings are going to be very good in Japan. The next results season starting in a couple of weeks is going to be spectacular and that's where the Nikkei is likely to catch a bid again," he added. 

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