Assessing the impact of the Chinese stimulus package at home and abroad: A damp squib?

- The November 2008 Chinese stimulus package seemed to provide almost ideal preconditions for governmental success based upon its relative size, its concentration on infrastructure, and supportive expansions in bank lending rates.
- Shanghai market gains were concentrated primarily in the nation's property, construction, and building materials sectors. Additional gains accrued to the specifically targeted automobile, steel and textile industries.
- Future work could usefully address the potential interplay between the sector-specific and industry-specific investor responses and the apparent concentration of the economic benefits among the regions featuring larger shares of state-owned enterprises.

The November 2008 Chinese stimulus package seemed to provide almost ideal preconditions for governmental success based upon its size, its concentration on infrastructure, accompanying fiscal expansion at the local level, and supportive expansions in bank lending rates. Our sectoral-level analysis suggests that investor reactions were quite tightly focused, however, with Shanghai market outperformance concentrated primarily in the nation's property, construction, and building materials sectors. Further significant post-stimulus gains accrued to the specifically targeted automobile, steel and textile industries. Meanwhile, Chinese company listings in Hong Kong and New York evinced little sectoral outperformance.