China Announces Broad Range Of Measures To Finance Domestic Demand Expansion

China’s State Council has announced a broad range of measures to make sure that there is plenty of liquidity in the economy next year and that consumers, companies and infrastructure projects get the loans they need so their spending can boost domestic economic activity.

Among the 30-point mandate (in Chinese):

  • a 17% target increase in money supply in 2009, a substantial increase from the 15% annual rate in November (M2: bank and cash deposits);
  • a suspension of government issuance of three year bills and fewer one-year and three month bills, which were used to sop up liquidity when inflation was the problem;
  • a loosening of bank lending rules;
  • more state directed lending to projects that fall into the 4 trillion yuan stimulus package;
  • keeping the yuan stable;
  • new steel and grain futures markets, an expanded corporate bond market and a Nasdaq-like market for start-ups.
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