As the commodity markets and investors wait in wings to catch an early glimpse of stimulus measures by nations, especially China; there is little wonder that copper climbed on Premier Wen Jiaoba's words that there’s “growing room for monetary policy operation,”
Three month copper on the LME climbed as much as 0.8 percent to $7,443.75 a metric ton before getting traded at $7,426.75 at 11:04 a.m. Shanghai time even as December-delivery copper climbed 0.5 percent to $3.3765 per pound on the Comex in New York.
The premier has remarked that downward pressure on the economy remained “relatively large,”; Bloomberg News said citing Chinese state radio.
“A stimulus is long overdue...and stimulus delayed is stimulus denied.” said Martin Patrick, a Kochi based economist.
“Unless some concrete measures are announced in a period of one month, there could be some trouble in the Chinese economy”, he added.
He, however ruled out a coordinated stimulus measures from the part of BRICS happening due to political issues. “Everybody likes to create the impression of no-problem-we-are-all-growng thing. That's politics, nothing else.”
“And even if something to that tune occurs, it would not solve problems as the troubles lay with the Euro Zone economies rather than BRICS. There are limits to such kind of interventions.” he reiterated.
He observed that monetary easing is not all about a stimulus package. “Monetary easing assures cash flow in the economy...it is not a package measure manifesting.”
What kind of stimulus?Earlier it had been noted in a report that Chinese political system, given its closed structure has been able to hide certain facts. There could be problems embedded in the Chinese economic system which have been hiding for a while and which may come out at any given point in the near future.
“Take for example the case of agriculture; not much of growth is getting registered there...Look at the trade data; mutual trade between modestly growing India and China has dipped by 25% in the second quarter.” Martin Patrick had said.
“That's not a good signal.” he added.
The economic nightmare unveiling in Europe and the stalled recovery in US would continue to challenge Chinese economy.
“Yes, there would be stimulus measures, but would be intended at stimulating the household sector consumption and promoting growth of manufacturing sector in finished goods.”
In another development on Wednesday, Brazil has announcedstimulus measures and privatisation drive to kick start the economy. Brazil, the commodity country could be injecting a $50bn stimulus to the economy through various plans, over a five year period.
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