Bloomberg columnist William Pesek writes about the “whiplash” suffered by investors in China and India, where predictions about the impact of the global economic crisis have swung wildly:
China is doing its best to show it’s on top of things. Its efforts seem more like growing panic than steady policy making. The central bank cut its key interest rate by the most in 11 years last week, and the government said “forceful” measures were needed to arrest a faster-than-expected economic decline.
“China and India were touted as the saviors of world growth, but very quickly they’re looking third world again, so investors are stampeding for the exit,” says Simon Grose-Hodge, a strategist at LGT Group in Singapore.
You would think China’s recent 4 trillion yuan ($586 billion) stimulus plan would fall into the forceful category. Yet Beijing’s plans to spend a fifth of gross domestic product were more spin than reality. Much of it was a tally of existing efforts, and economists were quick to call China on it. Expect China to get far more serious.