2015-11-12

Governments Spend Like Crazy To Lift GDP Growth

The spike in spending matches the recent comments by provincial officials. These efforts will only serve to cannibalize future growth and leave the governments in a weaker position next year, if it fails to spark a recovery. I expect it will fail for the same reason these types of policies have failed all across the developed world, due to the current position within the credit cycle, demographics, and flawed economic models.

Bloomberg: China Speeds Up Fiscal Spending in October to Support Growth
China’s government spending surged four times the pace of revenue growth in October, highlighting policy makers’ determination to meet this years’ growth target as a manufacturing and property investment slowdown weigh on the economy.

Fiscal spending jumped 36.1 percent from a year earlier to 1.35 trillion yuan ($210 billion), while fiscal revenue rose 8.7 percent to 1.44 trillion yuan, the Finance Ministry said Thursday. In the first ten months of the year, spending advanced 18.1 percent and revenue increased 7.7 percent.

I wonder if they bought cars with some of the money.

IBD: China Auto Sales Rev Higher In October On Tax Cut
Forget Singles Day, a Chinese holiday that falls in November. Auto sales in China surged in October, with SUVs up 60%. Deliveries of all vehicles in China climbed 13% to 1.94 million, according to the China Association of Automobile Manufacturers.

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