Monday 16 March 2009


THE CHINESE ARE SPENDING THEIR WAY TO RECOVERY

Christian Fleming

China Briefing, March 16, 2009

Since the collapse of major financial institutions this past fall, China has been spending a fortune trying to keep their country running smoothly and continue expanding. A large part of this spending has come from the RMB4 trillion stimulus package designed to maintain growth even as world trade collapses.

The breakdown of the stimulus plan is as follows: RMB1.5 trillion in fixed-asset investment, RMB1 trillion to help rebuild areas in Sichuan affected by the earthquake, RMB400 billion for affordable-housing projects, RMB370 billion towards improving rural living standards, RMB370 billion towards technological innovation, RMB210 billion for energy-saving efforts, and RMB150 billion for health and education.

The Chinese government has pledged RMB1.18 trillion of the stimulus plan while the rest will come from provincial and municipal governments, policy loans, and corporate bonds.

Realizing that depending on exports to fuel growth relied too much on external factors from abroad; China needs to implement a strategy that would stimulate their economy by both increasing their domestic consumption while decreasing their reliance on foreign demand.

The recent stimulus plan has done that and more. Forty-five percent of the stimulus package has been directed towards fixed-asset investment in the form of roads, railways, airports, pipelines, and electricity networks, to name a few. Factories and other outdated facilities will be renovated or rebuilt while new projects will be added. So far this year, China has seen a 26 percent increase in urban fixed-investment up to more than RMB1 trillion. Furthermore, railway investment has tripled, agricultural doubled, and spending on coal-mining has increased by almost 60 percent.

(...) [artículo aquí]

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