The Financial Times today reported that the Chinese government is cheered somewhat that its fiscal stimulus package is working.

“Wen Jiabao declared China’s efforts to offset the effect of the global economic slowdown an “initial success” on Sunday as the economy performed “better than expected” last month. …

Speaking during a three-day visit to industrial regions in eastern China, Mr Wen said sales at some companies had begun to rebound, stockpiles were falling and electricity consumption was rising.”

Well, that all seems rather premature to me, especially since the package was just announced in October last year. And though monies in the package had already been disbursed in 2008 as part of infrastructure projects, it’s much too early to declare victory in what will be a very long economic march indeed.

“It was not expected to improve economic growth until the middle of this year but some industries, such as steel, have already shown more confidence since the stimulus package was announced. Scores of Chinese steelmakers have resumed production in the hope that it will lead to a sustained recovery in steel prices.”

Steel makers:
a) are mostly state-owned, with largesse passed on to them by the state-owned banks;
b) know that eventually, likely in the Spring, the real estate market will begin revivification;
c) are no rocket scientists and have a reputation for being famously speculative;
and
d) have probably been ordered to increase production.

I’d rather watch concrete dry.