Wen Armed And Ready

The top-up stimulus that Prime Minister Wen Jiabao was expected to announce at the National People’s Congress but didn’t does exist, he says, but he is keeping it in his back pocket until and if needed. Nor will he say what’s in it, only that “we have reserved adequate ammunition…At any time, we can introduce new stimulus.”

Just the confirmation of its existence was enough to cheer equity investors. Not so bond investors, following Wen’s expression of concerns about the safety of its extensive holdings of U.S. Treasuries and other dollar-denominated debt. “We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a press conference following the NPC meeting. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”

Take that as an admonition to Washington not to inflate its way out of recession by printing money. Of course, if Beijing did sell its U.S. debt on any large scale it would only self-defeatingly drive prices lower.

2 Comments

Filed under China-U.S., Economy, Markets

2 responses to “Wen Armed And Ready

  1. johnsmith9876

    Wen is mistaken. His resignation won’t save the Chinese economy. He better find something better for his back pocket.

  2. Pingback: Top-Up Stimulus On The Way? « China Bystander

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