China unpacking economic stimulus in steps to avoid ‘overleveraged’ response: economist

China may announce economic revival measures in steps rather than as a “huge stimulus package” to avoid overheating the markets, but fast enough to ease property sector pains, a regional economist said on Thursday.

Monetary stimulus from last month and any fiscal measures that follow will form parts in a series of moves that began last year, said Hoe Ee Khor, chief economist with the Singapore-based Asean+3 Macroeconomic Research Office (Amro).

Measures that could emerge from a Ministry of Finance briefing scheduled for Saturday might continue that roll-out, said the economist who follows China, Japan, South Korea and the 10-country Association of Southeast Asian Nations (Asean) region.

“We don’t know how big the measures will be, but one thing is certain, they are not going to announce a huge stimulus package as they did in 2009,” Khor said.

That package, he said, had sparked an “overleveraged” response in the markets. Overleveraging means borrowing too much money and being unable to pay it all back.

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China’s State Council released a 4 trillion yuan stimulus package (US$559 billion) in 2008 and the following year to cushion the impact from the global financial crisis and it is credited with helping economic growth recover to double digits by mid-2009.

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