Mini Stimulus On the Way; 5 Signals From Li Keqiang

WSJ: Chinese ‘Mini-Stimulus Package’ May Be Coming, Ex-PBOC Adviser Says
Mr. Li, a former adviser to the People’s Bank of China who also goes by David Daokui Li, said the government could conduct what he called “acupuncture stimulus,” because it would target specific key points. Elements could include lowering long-term financing costs and the implementation of previously announced reforms for state-owned enterprises, he said. He also said interest rates “still have room to cut.”

The PBOC earlier this week cut interest rates and flooded the banking system with new liquidity amid a deepening slowdown and a stock-market selloff in the world’s No. 2 economy.

Big Chinese stock-market drops in late June and early July “arguably can be perceived as a healthy price adjustment,” Mr. Li said. But steep stock-market declines since then are “more scary for policy makers because it’s not due to leverage, it’s not due to overborrowing, it’s not due to inexperienced investors,” he said. “It’s due to lack of confidence in the overall economy.”

Mr. Li said he hopes for a “relatively quick” economic recovery, “but proper policies must be put in place.”
It fits with Li Keqiang's recent comments: China premier Li Keqiang insists economy 'within appropriate range'
"in the context of complex and changing situations abroad and deep-rooted problems at home, we pressed ahead with progress while ensuring stability with sustained efforts for structural reforms and targeted macro-regulation measures".

"These included, among others, cuts in the required reserve ratio, interest rates, taxes and fees and measures aimed at stabilizing the market, which are already paying off."

...Li conceded that "now that the traditional drivers for growth are not as strong, it is important to come up with new measures to bolster reform and opening up. It is necessary to provide more public goods and services, and encourage mass entrepreneurship and innovation to boost the growth momentum".
iFeng condensed Li's comments into 5 signals: 李克强首次经济专题会释放五大重要信号

1. China's economy is experiencing new pressures (financial markets and weak trade)
2. Continue to implement a proactive fiscal policy and stable monetary policy
3. Use micro-stimulus to stabilize the macro economy
4. Continue to advance financial reform and maintain financial market stability
5. There's no basis for continued depreciation of the renminbi

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