Passing out the red envelopes

The Chinese New Year holiday just ended and as some businesses get back to work it looks like there may be a belated hongbao from the government. Premier Wen Jiabao said in a rare interview in London that Beijing may be looking to provide further stimulus to the economy as the global economic slowdown worsens. Farmers in China’s rural areas can also look for an extra red envelope coming during the Year of the Ox as the government has made rural spending, in the form of agricultural subsidies, a major priority. The government is also giving the Agricultural Bank of China (ABC) a little extra cash. Officials said ABC would receive US$30 million to prepare for an eventual listing. There is a question of whether Beijing can really afford to splurge though. The government registered a US$16.2 billion fiscal deficit in 2008, which was attributed to the US$585 billion economic stimulus package it launched in November.