China’s Turn To Stimulate

photo by maveric2003
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It was announced today that China will roll out a $586 billion stimulus plan to help their economy. News was revealed on the government’s website stating that the Cabinet has approved the plan to invest in the infrastructure as well as their social welfare program (it’s basically what Obama has proposed for the U.S., I guess it’s a good thing that this isn’t a communist country, yet.).
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The government has said that they would go ahead and spend $4 trillion over the next couple of years to help stimulate several key areas. Among them are, rural infrastructure, electricity, low income housing, water the environment as well as rebuilding after the damages from natural disasters.
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They also stated that there are plans to reform value-added taxes, which would cut cost to the Chinese industry by about $17.6 billion. In the statement released by the government they said “It comes amid indications that economic growth, exports and various industries are slowing.”
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China has been feeling the pain from the economic slowdown in the U.S. as well as Europe. The Chinese government has already cut the interest rates three times in just two months in hope to stimulate the economic expansion.
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It’s reported that some of the money will come from the private sector, but exact numbers weren’t given.
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China’s export have been growing by more than 20% annually, but the analyst such a major slowdown that it may even fall to zero before too long as global demands weakens.
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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.

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