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Home › Forums › Financial Markets/Economics › OT: China announces $586 billion economic stimulus plan

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  • November 9, 2008 at 7:30 AM #14399
    Coronita
    Participant

    I think I mentioned this a few threads ago a few weeks ago… China decided to do sort of their own economic stimulus plan. One key difference between their’s and ours though is that the billions of dollars are earmarked for building on infrastructure (as opposed to just forking it over to consumers for them to spend and send it overseas)…. Interesting read…

    http://biz.yahoo.com/ap/081109/as_china_stimulus_package.html

    It remains to be seen if (1) it will work (2) if they aren’t walking into their own lending mess with making credit more easily available….

    —————————
    BEIJING (AP) — China announced a $586 billion stimulus package Sunday in its biggest move to stop the global financial crisis from hitting the world’s fourth-largest economy.

    A statement on the government’s Web site said China’s Cabinet had approved a plan to invest the amount in infrastructure and social welfare by the end of 2010.

    Some of the money will come from the private sector. The statement did not say how much of the spending is on new projects and how much is for ventures already in the pipeline that will be speeded up.

    China’s export-driven economy is starting to feel the impact of the economic slowdown in the United States and Europe, and the government has already cut key interest rates three times in less than two months in a bid to spur economic expansion.

    Economic growth slowed to 9 percent in the third quarter, the lowest level in five years and a sharp decline from last year’s 11.9 percent. That is considered dangerously slow for a government that needs to create jobs for millions of new workers who enter the economy every year and to satisfy a public that has come to expect steadily rising incomes.

    Exports have been growing at an annual rate of more than 20 percent but analysts expect that may fall as low as zero in coming months as global demand weakens.

    The statement said the Cabinet, at a meeting chaired by Premier Wen Jiabao, had “decided to adopt active fiscal policy and moderately easy monetary policies.” It did not give details.

    The statement said the spending would focus on 10 areas. They included picking up the pace of spending on low-cost housing — an urgent need in many parts of the country — as well as increased spending on rural infrastructure.

    Money will also be poured into new railways, roads and airports. Spending on health and education will be increased, as well as on environmental protection and high technology.

    Spending on rebuilding disaster areas, such as Sichuan province where 70,000 people were killed and millions left homeless by a massive earthquake in May, will also be sped up. That includes $2.93 billion planned for next year that will be moved up to the fourth quarter of this year.

    The statement, without giving details, said rural and urban incomes would be increased.

    Credit limits for commercial banks will also be removed to channel more lending to priority projects and rural development, it said.

    As well, reform of the value-added tax system will cut taxes by $17.5 billion for enterprises, the statement said.

    The plan was announced before President Hu Jintao goes to Washington to push Western leaders to give poorer countries a bigger role in global financial institutions at a Nov. 15 summit of the Group of 20 major economies on the financial crisis.

    November 9, 2008 at 9:07 AM #301842
    Arraya
    Participant

    The US has been building up China and simultaneously destroying itself for decades now. Usually it’s spun by DC that such and such policies are good for the US, not really lying just leaving out the part where it only benefits a few. Those manipulations are becoming transparent and our stimuli are just kicking the can down the road to the day of reckoning while pumping up China in the short term. Just ask Paulson, he’s been to China 60+ times in the past few years, setting up shop no doubt.

    November 9, 2008 at 9:07 AM #302200
    Arraya
    Participant

    The US has been building up China and simultaneously destroying itself for decades now. Usually it’s spun by DC that such and such policies are good for the US, not really lying just leaving out the part where it only benefits a few. Those manipulations are becoming transparent and our stimuli are just kicking the can down the road to the day of reckoning while pumping up China in the short term. Just ask Paulson, he’s been to China 60+ times in the past few years, setting up shop no doubt.

    November 9, 2008 at 9:07 AM #302207
    Arraya
    Participant

    The US has been building up China and simultaneously destroying itself for decades now. Usually it’s spun by DC that such and such policies are good for the US, not really lying just leaving out the part where it only benefits a few. Those manipulations are becoming transparent and our stimuli are just kicking the can down the road to the day of reckoning while pumping up China in the short term. Just ask Paulson, he’s been to China 60+ times in the past few years, setting up shop no doubt.

    November 9, 2008 at 9:07 AM #302226
    Arraya
    Participant

    The US has been building up China and simultaneously destroying itself for decades now. Usually it’s spun by DC that such and such policies are good for the US, not really lying just leaving out the part where it only benefits a few. Those manipulations are becoming transparent and our stimuli are just kicking the can down the road to the day of reckoning while pumping up China in the short term. Just ask Paulson, he’s been to China 60+ times in the past few years, setting up shop no doubt.

    November 9, 2008 at 9:07 AM #302281
    Arraya
    Participant

    The US has been building up China and simultaneously destroying itself for decades now. Usually it’s spun by DC that such and such policies are good for the US, not really lying just leaving out the part where it only benefits a few. Those manipulations are becoming transparent and our stimuli are just kicking the can down the road to the day of reckoning while pumping up China in the short term. Just ask Paulson, he’s been to China 60+ times in the past few years, setting up shop no doubt.

    November 9, 2008 at 9:13 AM #301847
    XBoxBoy
    Participant

    So I’m curious how they will fund their bailout. The USA seems to be funding theirs by a combination of printing money and selling lots of new treasuries. (Which presumably China and other foreigners will buy)

    Will China just print money or will they issue debt, or maybe will they sell the existing treasuries that they have. If they just print money, won’t inflation be an issue for them? I was under the impression that inflation was more of an issue already for them than for USA. If they issue debt, who would buy it? The USA??? If they sell their current treasury holdings that would create havoc with the USA’s plans to bail itself out, and presumably would cause the dollar to fall, hurting what’s left of China’s export business. So, what’s it gonna be? How will they fund this half a trillion bailout?

    November 9, 2008 at 9:13 AM #302205
    XBoxBoy
    Participant

    So I’m curious how they will fund their bailout. The USA seems to be funding theirs by a combination of printing money and selling lots of new treasuries. (Which presumably China and other foreigners will buy)

    Will China just print money or will they issue debt, or maybe will they sell the existing treasuries that they have. If they just print money, won’t inflation be an issue for them? I was under the impression that inflation was more of an issue already for them than for USA. If they issue debt, who would buy it? The USA??? If they sell their current treasury holdings that would create havoc with the USA’s plans to bail itself out, and presumably would cause the dollar to fall, hurting what’s left of China’s export business. So, what’s it gonna be? How will they fund this half a trillion bailout?

    November 9, 2008 at 9:13 AM #302212
    XBoxBoy
    Participant

    So I’m curious how they will fund their bailout. The USA seems to be funding theirs by a combination of printing money and selling lots of new treasuries. (Which presumably China and other foreigners will buy)

    Will China just print money or will they issue debt, or maybe will they sell the existing treasuries that they have. If they just print money, won’t inflation be an issue for them? I was under the impression that inflation was more of an issue already for them than for USA. If they issue debt, who would buy it? The USA??? If they sell their current treasury holdings that would create havoc with the USA’s plans to bail itself out, and presumably would cause the dollar to fall, hurting what’s left of China’s export business. So, what’s it gonna be? How will they fund this half a trillion bailout?

    November 9, 2008 at 9:13 AM #302230
    XBoxBoy
    Participant

    So I’m curious how they will fund their bailout. The USA seems to be funding theirs by a combination of printing money and selling lots of new treasuries. (Which presumably China and other foreigners will buy)

    Will China just print money or will they issue debt, or maybe will they sell the existing treasuries that they have. If they just print money, won’t inflation be an issue for them? I was under the impression that inflation was more of an issue already for them than for USA. If they issue debt, who would buy it? The USA??? If they sell their current treasury holdings that would create havoc with the USA’s plans to bail itself out, and presumably would cause the dollar to fall, hurting what’s left of China’s export business. So, what’s it gonna be? How will they fund this half a trillion bailout?

    November 9, 2008 at 9:13 AM #302286
    XBoxBoy
    Participant

    So I’m curious how they will fund their bailout. The USA seems to be funding theirs by a combination of printing money and selling lots of new treasuries. (Which presumably China and other foreigners will buy)

    Will China just print money or will they issue debt, or maybe will they sell the existing treasuries that they have. If they just print money, won’t inflation be an issue for them? I was under the impression that inflation was more of an issue already for them than for USA. If they issue debt, who would buy it? The USA??? If they sell their current treasury holdings that would create havoc with the USA’s plans to bail itself out, and presumably would cause the dollar to fall, hurting what’s left of China’s export business. So, what’s it gonna be? How will they fund this half a trillion bailout?

    November 9, 2008 at 10:10 AM #301862
    HereWeGo
    Participant

    Yeah, this seems like less than bullish news for the Treasury market. Yikes.

    Then again, an expansion of Chinese domestic consumption might be bullish for US exporters. Will our citizens fill their WalMarts with US made goods?

    November 9, 2008 at 10:10 AM #302220
    HereWeGo
    Participant

    Yeah, this seems like less than bullish news for the Treasury market. Yikes.

    Then again, an expansion of Chinese domestic consumption might be bullish for US exporters. Will our citizens fill their WalMarts with US made goods?

    November 9, 2008 at 10:10 AM #302227
    HereWeGo
    Participant

    Yeah, this seems like less than bullish news for the Treasury market. Yikes.

    Then again, an expansion of Chinese domestic consumption might be bullish for US exporters. Will our citizens fill their WalMarts with US made goods?

    November 9, 2008 at 10:10 AM #302245
    HereWeGo
    Participant

    Yeah, this seems like less than bullish news for the Treasury market. Yikes.

    Then again, an expansion of Chinese domestic consumption might be bullish for US exporters. Will our citizens fill their WalMarts with US made goods?

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