The Rio Tinto Limited (ASX: RIO) share price is up 1.44% in late afternoon trading to $98.56.
Fellow ASX mining shares BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) are similarly up by 1.82% and 1.34% respectively.
The big miners might be doing well today because of reports that China is considering a massive new stimulus program to boost its economy following disruptive recent COVID-19 lockdowns.
Let's look at the detail.
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Rumours of China stimulus boost Rio Tinto share price
According to a Bloomberg report, the Chinese Ministry of Finance is considering a US$220 billion stimulus program.
The program would be funded through special bonds issued by local governments. The bonds would be taken from their FY23 quotas to ramp up infrastructure investment.
The Chinese budget year begins in January. This would be the first time the central government has allowed bonds to be issued ahead of time. Therefore, the plan would require a State Council review and possibly approval by the National People's Congress.
The US$2.2 billion would be on top of US$164 billion in infrastructure spending already announced in recent weeks.
Bloomberg quoted Wei Yao, Societe Generale's chief economist and head of research for Asia/Pacific: "It has been clear for sometime that local governments need more money. The central government is still unwilling to expand its own balance sheet."
The article said it is instead letting local governments borrow more. Yao says that means "a fiscal cliff next year".
What this means for ASX mining shares
More infrastructure spending in China means more demand for our commodities, particularly iron ore which is used to make steel.
Commodity prices have increased on the news.
According to Trading Economics, Zinc rose by 3.55%, iron ore (62% fe) is up 2.46%, and aluminium is up 1.37%.
Rio Tinto share price outlook
The Rio Tinto share price is down 1.18% in the year to date. This is largely due to the falling iron ore price.
While the price is still elevated, it has fallen in 2022 due to fears of a global recession caused by rising inflation and interest rates.
As my Fool friend Tristan reports today, top broker UBS has downgraded its 12-month price target for Rio Tinto to $98. Credit Suisse is more bullish with a price target of $118 on Rio Tinto shares.
In addition, Credit Suisse thinks Rio will pay a grossed-up dividend yield of 20% in FY22 and 18% in FY23.
