ASIA BRIEFING:Chinese officials insist that the country is sufficiently 'Greece-proofed,' writes CLIFFORD COONAN

WHEN IS A stimulus programme not a stimulus programme? This is a question financial markets all over the world have been asking in the past week or so, as China looked set to launch a fresh round of fiscal measures to offset the effects of Europe’s dire debt woes.

Leading financial institutions were talking of a two-trillion-yuan (€250 billion) programme last week and the news cheered stock markets around the region.

It looked like cash-rich China was riding to the rescue again, just like in 2008, when the globe was mired in the financial crisis and Beijing rolled out a four-trillion-yuan (€500 billion) stimulus package, a shot in the arm for the global economy.

Not so fast, said the Chinese government. Current measures do not really count as a stimulus plan per se. The policy is an

attempt to fast-track infrastructure and industrial investment projects, while giving generous subsidies for energy-saving home appliances and a cash-for-clunkers plan to encourage people in rural areas to buy cars.

Local governments are increasing investment as well and, in other cases, there have been no efforts to stimulate the economy, but merely to speed up the approval process.

Which might look like a stimulus plan, but in fact it’s more of a spur to the economy, the Chinese officials have been saying.

Stephen Green at Standard Chartered in Hong Kong described the policies by the State Council, or cabinet, as a “measured but still significant set of stimulus measures, which should begin to affect growth in August-September”.

The reason the Chinese government is shying away from crying “stimulus” is because the 2008 plan translated a year later into excessive credit expansion and left a lot of government debt behind.

And, frankly, the need for stimulus is not as pronounced now as it was back then.

“Clearly, the government has become more worried about the downside risk to growth and is stepping up the effort to support growth. Among all the measures, we expect infrastructure investment, including in transport, utility and waterworks to be most effective in the short run and forecast a significant rebound in such investment in the coming months,” said Wang Tao, China strategist at UBS.

Despite the Chinese government coming over all coy on its stimulus intentions, expectations that it will unveil more such measures to combat the slowdown are unlikely to go away. Just because the government has denied that this is a stimulus plan in the classic sense, this has not stopped expectations that something might come soon.

In March, premier Wen Jiabao told the National People’s Congress that this year’s growth target was 7.5 per cent, down on former levels.

It is expected to come in a bit higher than this – most analysts believe about 8.2 per cent this year, the lowest since 1999. The trend is for less growth being the norm.

However, he has been talking of finding ways of supporting the economy in recent weeks, and this has raised hopes.

These have been raised further by a brutal array of downbeat data in April, which has caused jitters about the prospects for the world’s second largest economy. On Friday, China’s official purchasing managers’ index was shown sinking nearly three points to a 2012 low of 50.4 in May.

A succession of senior officials from the country’s top economic planning agency, the National Development and Reform Commission, have been wheeled out to push the message that growth is on track.

“We will ensure sound and fast economic growth this year,” said Du Ying, vice- chairman of the commission. Du went on to say that the pace of economic growth, which is set to slow for a sixth consecutive quarter because of slackening demand at home and abroad, was still “within expectations”.

China’s annual economic growth is expected by analysts to fall to 7.9 per cent in the second quarter, the first time since 2009 that it has gone below 8 per cent.

That could pile pressure on authorities to take further action to support growth, such as cutting interest rates to deal with risks to growth and corporate profits.

Of course, the big unknown factor is what happens if Greece quits the euro, prompting a wider crisis. Chinese officials also insist that the country is sufficiently “Greece-proofed” and will be able to manage if Greece does leave the euro.

“Assuming a Greek exit would lead to a financial and economic crisis as damaging as the collapse of Lehman Brothers, China would be able to cope,” said Zhang Yansheng, secretary-general of the commission’s academic committee.

China will be safe because it has a huge domestic market and its financial system is relatively closed – which in some ways is a tacit admission that the country has failed to open up its financial markets in the last couple of decades.

However, he conceded that exporters who sell into Europe would suffer if Greece quit the euro – Europe is one of China’s biggest trading partners along with the US – but insisted the possibility of Greece making that step was “very low”.