China prepares vast stimulus as slump threatens Asia

The bellwether economies of Taiwan and Singapore both contracted in the second quarter. Korea’s industrial output fell in June, while Japan’s manufacturing PMI index fell in July to the lowest since the Fukushima disaster, with the export gauge crashing to recession levels.

“Factory output, new orders and exports all decreased at the fastest rates since April 2011. These are worrying developments given the weakness of global demand,” said Markit’s Alex Hamilton.

While China has ostensibly held up much better, electricity use has been falling in recent months. “Unless the Chinese steel and aluminium industries have discovered how to make do without electricity, it would appear that their growth has virtually ground to a halt,” said Berkeley professor Barry Eichengreen.

China’s president, Hu Jintao, has told officials to brace for economic shocks from abroad, calling for “fiscal and monetary support and efforts to expand domestic demand”.

The city of Changsha has seized the moment, unveiling plans to spend $130bn (£82bn) on roads, satellite towns, and an industrial park – almost 150pc of its GDP.

Read more: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9442497/China-prepares-vast-stimulus-as-slump-threatens-Asia.html