There are increasing indications that Premier Li Keqiang may have blinked.

Despite the rhetoric of the last several months, that the government in China would not cave in and stimulate the economy, there are signs that a “Claytons” stimulus is in place. Australians will understand this phrase - it comes from a non-alcoholic beverage that was marketed as the beer you have when you are not having a beer. And this seems to be the stimulus we are having when we are not having a stimulus.

The Chinese magazine Caijing has reported that a meeting took place in Beijing a few weeks ago, to discuss the current economic situation and determine the tone of macroeconomic policies for the second half of the year. One day after that meeting, the State Council executive meeting deployed its municipal infrastructure construction plan, covering items from urban underground pipe network construction and transformation, to sewage and garbage disposal and recycling facilities, as well as subway, light rail and other public transport system construction. There was a special focus on light rail with an increase in the number of projects, especially in mid-Western provinces, and a boost to the capital investment.

The Caijing article also says that reform of taxation, finance and energy will be a top priority, in an effort to underpin the stimulus program with more social and market orientation. The 2008 RMB4 trillion package created many problems in the Chinese economy, largely due to its capital intensive nature, according to the article.

This is but one of many signs that perhaps there has been a quiet change of sentiment, although to be fair, there are others who argue that economic bureaucrats are preparing for GDP growth rates below 7%.

But don’t look at indicators such as iron ore prices or steel industry activity as a sign that things are turning. Iron ore prices are relatively high at the moment, driven by the cyclic de-stocking/re-stocking program that drives that market, while steel companies are in many cases running in deep negative territory. Any sign that steel production is falling could be more to do with steel companies going bust, while an increase in steel output may be more to do with job preservation.

It is probably still too early to tell, and we may not know until we get to the end of the year. That’s when we can look back and see what really happened - lagging indicators are good for hindsight, even if not much use for foresight.

Meantime, the Communist Party has announced that its next plenary meeting will take place in November. That’s when those reforms of taxation, finance and energy, as well as the one-child policy, Hukou reform and other measures are likely to get an airing. But even then, such changes are not likely to have any immediate impact.

Perhaps Li Keqiang has blinked, and agreed to loosen the reins a little, and very quietly, but it’s unlikely we will see any serious signs of a recovery for some several months yet.