It looks like the thin rays of hope generated by the stimulus plan are brightening, at least for some. China’s policy favorites, the state-owned enterprises (SOEs), at least, are seeing a dramatic improvement in profitability: 170 surveyed SOEs reported a 26% increase in profits in March year-on-year. While this is unquestionably good news, analysts believe the increase in profits is largely produced by banks and oil companies, so the sustainability of such economic creationism – and to what extent the benefits trickle down to the little guys in the private sector – remains to be seen. However, in some cases Beijing’s preference for its oil companies runs up against foreign countries’ preference for their oil companies. So Beijing has been making some clever compromises recently, extending credit to foreign national oil companies in exchange for privileged access and guaranteed supply. The Kazakhstan deal announced Friday, for example, will give Kazakhstan US$10 billion in cash for new investment projects in exchange for a 50% stake in a major Kazakhstan oil producer and priority on future energy cooperation.
Another big favorite, the panda, is getting fresh stimulus in the form of a brand US$230 million new mating facility to replace the old one destroyed in last year’s earthquake. Pandas are, in fact, a sort of furry SOE. They are large, slow, they eat all day, and the funds used to sustain them could sustain a dozen other endangered species. On the other hand, they are cuter than China’s oil bureaucracy, and most of the money to build the breeding center is coming from Hong Kong donors anyway, so we won’t grudge the pandas their love shack.