China's New Deal

ralphrepo · Nov 24, 2008

Several days ago, I had noted the possibility for risk of riots in the PRC: China's Gonna Riot Well, it looks like the PRC government is actually ahead of the curve on this. The powers that be are recognizing that joblessness impact from the global financial disarray would have such potential for social unrest that they've moved preemptively by offering a New Deal styled stimulus to its economy. For those that slept through American history 101, the New Deal was then US President Roosevelt's make work program for the American people after the stock market crash of 1929, putting much needed cash back into the then starving US domestic economy. I say hurrah, it looks like the provincial governments and ZhongNanHai may be doing its job for a change; anticipating and moving to head off another domestic economic crisis. -lol

In a rush? For a quick synopsis, just read the red highlighted lines.

What the Chinese Stimulus Package Means
The Associated Press
Sunday, November 23, 2008

BEIJING: Governments of Chinese provinces have proposed more than $1.4 trillion in spending on roads and other projects after the central government announced a huge national stimulus package this month to shield China from a global slowdown, state television reported Sunday. The central government's announcement electrified investors and briefly bolstered global markets. But as details were released, it became clear that the program, whose value was put at 4 trillion yuan, or $586 billion, included less new spending than initially thought. Similar concerns are already being raised about the provincial governments' proposals. The key to the success of the national package will be its ability to reassure consumers, which makes its emotional impact as important as its actual size and gives Communist leaders an incentive to embellish figures.

On Sunday, China Central Television said spending plans announced during the past week by provincial governments totaled 10 trillion yuan. But it gave few details and no indication how much of that figure represents new spending, as opposed to plans announced earlier. "Within a week, the governments of various provinces announced massive-scale investment blueprints," the CCTV report said. "Based on a rough calculation, the current total investment by all the provinces and cities has already exceeded 10 trillion yuan." The biggest proposal came from Yunnan Province, which plans to invest 3 trillion yuan over the next five years, CCTV said. The Guangdong Province proposed 2.3 trillion yuan in investments. Zhang Liqun, a researcher at an organization attached to the cabinet's planning agency, said the provinces' proposed spending was mainly on projects related to railroads, roads, ports and low-income housing, according to CCTV. "It will have quite an obvious effect on the country's medium and long-term economic development," Zhang said.

But The 21st Century Business Herald, a Chinese business newspaper, said few investments announced by the provinces were new. It said most were either already under construction, had been under discussion for some time or had been planned but not begun because of a lack of money. Provinces may have revived some of those defunct projects in the hope that the difficult financial times would persuade Beijing to finance them.

China's economic growth slowed in the latest quarter to 9 percent, down from 11.9 percent a year earlier. Nine percent would be the highest of any major economy, but Chinese leaders are alarmed at the rapid drop in growth and worried that rising layoffs could provoke unrest. Analysts have suggested that Beijing filled its stimulus program with as many projects as possible, including many already under way, to produce a big yuan figure that would encourage consumers and companies to spend. The program, announced on Nov. 9, was aimed at increasing domestic consumer spending to reduce Chinese reliance on the cooling global export market. Analysts have said that the package includes projects already covered by its five-year plan that runs through 2010. But Frank F.X. Gong, chief regional economist for JPMorgan Chase, says it still calls for about 1.6 trillion yuan in spending on top of previously announced projects.

Beijing has said that it will provide 1.8 trillion yuan of the stimulus spending, while local governments and state companies will supply the rest. On Sunday, Prime Minister Wen Jiabao called for companies to bolster confidence and adapt to market changes to weather the global crisis, said Xinhua, the official news agency.

Source: http://www.iht.com/articles/2008/11/23/business/yuan.php
Click to expand...

Anything to prevent suffering of the Chinese people gets my vote. Let's hope that the package is real (and not just some CCP publicity gimmick) and the funds are not siphoned off by greedy bastards like with the US financial market non transparent bailout. :ugh:

peren · Nov 30, 2008

Amen to that, time to invest in chinese infrastructure/raw building material companies.

Aoes · Dec 1, 2008

whoa... completely missed this thread... newayz... i believe an "i told u so..." is in order

China's New Deal

ralphrepo Well-Known Member

peren Member

Aoes Well-Known Member