Revisionism at it's finest! The problem with the US stimulus was that it was 30% tax cuts (that really helped). A concession to the republicans.
source:
New York Times
China plans $586 billion economic stimulus
Published: Sunday, November 9, 2008
SHANGHAI — China announced a huge economic stimulus package Sunday aimed at bolstering its weakening economy and, in the process, perhaps helping to counter the effects of the global economic slowdown.
In a sweeping move, Beijing said it would spend an estimated $586 billion by 2010 on wide array of national infrastructure and social welfare projects. They would include new railroads, subways and airports and rebuilding areas like those devastated by the Sichuan earthquake in May.
The package, which was announced by the State Council, or cabinet, is the largest economic stimulus effort ever undertaken by the central government. It would amount to about 7 percent of China's gross domestic product during each of the next two years. Beijing also said that it would be loosening credit and encouraging lending and that it needed to have a more "pro-active fiscal policy" to strengthen its economy.
"Over the past two months, the global financial crisis has been intensifying daily," the State Council said. "In expanding investment, we must be fast and heavy-handed."
The stimulus plan would be enormous for any country, let alone one whose gross domestic product is lower than most other major industrialized countries, at around $3.5 trillion. By comparison, the United States, with an economy of almost $14 trillion, sent out about $100 billion in tax rebate checks this summer. Germany last week agreed to a €23 billion stimulus plan, or about 2 percent of its GDP.
"It's a huge package," Dominique Strauss-Kahn, managing director of the International Monetary Fund, was quoted as saying by Reuters after a meeting of Group of 20 finance officials in São Paulo. "It will have an influence not only on the world economy in supporting demand but also a lot of influence on the Chinese economy itself, and I think it is good news for correcting imbalances."
China's announcement comes days before the President Hu Jintao is scheduled to travel to Washington for a global economic summit meeting that will be attended by leaders from around the world, including President George W. Bush. At the meeting, China is expected to be pressed again to do its part to help strengthen the global economy in the face of what some economists say is the worst financial crisis since the Great Depression. But Beijing has already indicated that it intends to help stabilize the global economy by helping keep the Chinese economy, the world's fastest-growing, on track.
On Saturday, Hu spoke by telephone with President-elect Barack Obama about issues including the global financial crisis and how China and the United States might cooperate to help resolve economic problems, according to China's state-run news media.
At home, Beijing is struggling to cope with a rapidly slowing economy. After five years of growth in excess of 10 percent, the Chinese economy is weakening because of slowing export and investment growth, declining consumption and severely depressed stock and property markets.
Factory closings in southern China have led to mass layoffs and even sporadic protests by workers who complained that owners disappeared without paying them their wages.
With many economists in China now projecting that growth in the fourth quarter of this year could be as low as 5.8 percent here, and worries that China's economic miracle could be walloped by the global financial crisis, the government is moving aggressively.
Analysts were expecting China to announce a big stimulus package but were surprised at the size of it.
"That is much more aggressive than I expected," said Frank Gong, an economist in Hong Kong with JPMorgan Chase. "That's a lot of money to spend. They'll be building subways, railroads, bridges, roads. The key is to stimulate end demand."
Beijing undertook a much smaller effort after the Asian financial crisis in 1997 to help keep the economy growing.
<NYT_UPDATE_BOTTOM></NYT_UPDATE_BOTTOM></NYT_TEXT>
