Why the stimulus package might still not work – Victor Shih

While some might see some positive economic signs in China, assistant-professor Victor Shih sticks to his gun and does not see a real recovery. In his weblog he points at all those important signals that are still not well and not encouraged by the 5 trillion renminbi stimulus package:

1. First of all, export and FDI continue to fall at a pretty fast pace, which can’t be helped.

2. More alarming, inventory for many industrial goods continue to build UP! According to a recent note by Stephen Green’s team, refined oil inventory is up over 35% YoY as of the end of February.

3. Coal inventory seems to have gone down, but that’s because many coal mines have ceased to operate. The 21st Century Business Herald reported that 50-70% of mines are “resting” for the moment. Iron ore mines are facing the same problem as international iron ore now costs less than domestic ore.