Tuesday, May 06, 2014

Only high unemployment might trigger off real stimulus - Shaun Rein

Shaun Rein
+Shaun Rein 
Figures coming from China, especially recent PMI data look gloomy, but business analyst Shaun Rein does not expect any major stimulus plan soon, he tells in MoneyControl. Only high unemploymency, for example when many graduates cannot find jobs in June, could trigger off a minor stimulus plan.

Shaun Rein:
The indicator is not going to be PMI. It is not going to be GDP. It is going to be unemployment, especially university unemployment. There are going to be about 7 million Chinese university graduates that hit the job market in June of this year. If they cannot find jobs, and if lower income Chinese are at higher unemployment levels, then you are going to see a stimulus come in. What I expect to see over the next four-six weeks is: late easing. The government is going to probably announce some big infrastructure projects like the bridge or airport but they are not going to be new initiatives. These are going to be initiatives that they had already announced a year ago or six months ago and they are just going to accelerate the timetable. But the key is not PMI, it is going to be unemployment and wage numbers.

More in MoneyControl.
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