Copper and iron ore prices have held up surprisingly well as markets in the West belatedly come to grips with the coronavirus pandemic and China shifts focus from containment to rebuilding its economy following more than two months of inactivity.
On Wednesday BMO Capital Markets held a conference call with PRC Macro, a consulting firm focused on China’s political economy, about the prospects for 2020 GDP growth in the country.
PRC Macro anticipates spending by Beijing of as much as $570 billion primarily focused on infrastructure. PRC Macro says “in order to declare an economic victory, a 5% growth rate is the absolute minimum that will be acceptable”:
There are two parts to the stimulus plan. The first, which is almost complete, is to cover cashflows at businesses impacted by weak demand.
The second, just commencing now, is to bolster growth. Infrastructure spending is key, and much of the support (up to 4 trillion RMB) will come from policy banks.
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