Xis stimulus plan hits wall of skepticism in Washington

They're not there to sell the whole thing to investors, because if they were, they would have seized the opportunity, said Alicia Garcia Herrero, chief economist for the Asia-Pacific region at Natixis SA. They are being cautious about dominating the agenda with stimulus measures that people doubt.

A person who met with Chinese officials privately this week said Beijing was asking participants to wait and see how the measures announced so far would be implemented, and advising them that policy would evolve if necessary.

Finance Minister Lan Foan suggested earlier this month that the central government still had room to increase deficits and borrowing limits, as officials simultaneously try to halt the decades-long housing crash. years and reduce risks linked to local debt and the financial sector.

The next big window in China's closely watched stimulus program is the meeting of top lawmakers, during which any new budget or government borrowing will be subject to approval. Although budget policies are not on the published agenda, a mid-year budget increase at the same meeting last year was only revealed after it passed. This year's vote is scheduled to take place on the final day, November 8, three days after the US election.

I suspect they are waiting for the U.S. election to see what they should do, Raghuram Rajan, former governor of the Reserve Bank of India, said on a panel, echoing a sentiment heard this week among the groups Washington think tank. The bazooka could be very powerful if the US elections go against them.

Trump has pledged to impose a flat 60% tax on Chinese exports if he wins the November vote, a move that economists at UBS Group AG say could cut China's annual growth rate in half. China. Now is the time to resort to bazooka-like actions to revive the economy, Rajan added, rather than relying on the moderate measures used many times before.

Beijing's announcements so far have led a number of Wall Street banks to raise their forecasts for the country's growth this year, to a pace closer to the official target of around 5%, and have triggered a sharp rise in Chinese stocks. But they haven't amounted to a package of everything it will take, Haibin Zhu, chief China economist at JPMorgan Chase & Co., said during a panel discussion, during which he predicted that Xi would likely continue to focus on advanced manufacturing to propel the economy.

This will likely irritate business partners. The United States and European Union have responded to the influx of cheap Chinese exports by imposing tariffs aimed at protecting their markets.

German Finance Minister Christian Lindner criticized Beijing's policies at IMF meetings, saying China knew it would not be as competitive as the United States in the coming decades and was trying to harming the world order simply to improve its negotiating position.

While China's central bank governor Pan Gongsheng and others have given a series of press briefings in China this year, such events are carefully orchestrated with questions considered in advance, a level of scrutiny that officials would not have abroad where they would probably be asked to respond to criticism. .

You don't want to be ahead of the leader and say something you would regret when you return to Beijing, said Neil Thomas, a Chinese politics researcher at the Asia Society Policy Institutes' China Analysis Center. They wouldn't want to give up their skis.

As Chinese officials limited their conversations to private meetings, Vice Finance Minister Liao was occasionally seen around the labyrinthine IMF complex, traveling between closed-door meetings that likely won't be made public until he is in return home.

Everyone is absolutely interested in knowing the details of China's plans, said Brad Setser, a senior fellow at the Council on Foreign Relations, in the IMF's central atrium, where participants chatted over coffee. And frankly, it's a question of whether China will be able to grow next year without depending on the rest of the world.

–With help from Eric Martin, Philip Aldrick, Kamil Kowalcze and Christopher Anstey.

(Updated with legislators' meeting dates starting in the second paragraph)

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