Faced with the prospect of zero export growth, closing factories and mass layoffs, China joined moves by governments around the world to cushion the blow of the global slowdown with the announcement of the $586 billion package.
The plan calls for higher spending on roads, airports and other infrastructure, tax deductions for exporters and more aid to the poor and farmers. Spending on health and education will increase, as well as on environmental protection and high technology.
"We must implement the measures to ensure a fast and stable economic development," Premier Wen Jiabao said at a meeting of government leaders, according to a report read out on the state television. "They are not only the needs of the development of ourselves, but also our biggest contribution to the world."
The government's stimulus announcement appears to exaggerate the size of its plan by including projects already under way, including reconstruction from the devastating May earthquake in China's southwest, said Sherman Chan, an economist for Moody's Economy.com."The exaggeration highlights the government's desperation to revive sentiment, which is perhaps the key factor to sustaining growth amid global turmoil," Chan said in a report.
Source: Yahoo news
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Questions that remain and will be answered in a few weeks:
Will this revive the commodities again as it is focussed on infrastructure buildout ?
They are planning to spend $14 billion before the end of this year. Will this help kick start the markets for a Santa Rally?
Will this massive spending help the world economy esp US ?
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