There are several noteworthy developments from China.

The first, while still a bit sketchy, seems the most promising. President Hu Jintao seemed to signal an acceleration of infrastructure construction in the western part of the country. The top economic planning agency indicated earlier today that China will invest 682 billion yuan (about $100 billion) in 23 new major infrastructure projects beginning this year. This effort follows the 2.2 trillion yuan investment in 120 infrastructure projects in the 2000-2009 period.

The announcement seems to have coincided with the rekindling of the risk appetite and the lifting of the commodity currencies. Separate but related reports suggest China will cut the corporate tax for western regions to 15% from 25%.

Second, Nikkei reported that China dramatically expanded its Japanese government bond (JGB) holdings in recent months. Last year China appears to have sold a net 80 billion yen of Japanese government bonds.

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Posted by mopeng at July 6, 2010 10:06 AM