Strength in China

The recent rally has bears labeling it as a bear market rally and bulls screaming that the bottom has arrived and we are in the midst of a fierce bull market. If you are still skeptical about the shape of the US economy, maybe it's time to look at some actions taken by China, a country actually serious about stimulating its economy and actually creating jobs.

On Thursday, Solar stocks had the best day in a long time, as large Chinese Solar names like LDK and STP rallied over 40% on the news that China would launch a new government subsidy for clean power systems. Solar projects larger than 50 Kilowatts would be eligible for a subsidy of $2.90 per watt. This would go towards covering the actual cost of installation of the panels, thereby attempting to boost demand, which is the main plague on the solar names, despite the attempt by some analysts to blame oil prices. This action can be seen as a real stimulus for the solar names and affirms the Chinese government's desire and ability to help its economy.

In addition, actual citizens in China are benefiting from the new government plan to sell "spending tickets", which can be used to purchase certain domestic goods. For example, a $100 "spending ticket" may only cost a citizen $80 to purchase. This plan actually increases consumer spending and will stimulate the economy, probably more effectively than building bike trails. The idea was first implemented in Taiwan, where the government handed out free "spending tickets" to every citizen. The China plan is a slight modification, requiring citizens to contribute as well. The best part is that the Chinese government can actually afford the stimulus.