China Stimulus: More Show Than Substance?
Westerners are used to reading headlines from authoritarian governments with a grain of salt.
Should the same skepticism be applied today to China's grand economic stimulus plan?
America awoke today to the announcement that the Chinese government is rolling out a $586 billion economic stimulus plan. The sum sounds big and the move is applauded in many quarters with relief -- no global economic turnaround can truly occur without the participation of the Asian Dragon.
But after experts have taken a close look at the pieces of the plan, some air has come out of the balloon.
Only about 38 percent of the $586 billion is actual new spending, writes Forbes today, quoting economists and analysts.
The remaining 62 percent of the newly announced spending plan is money that was already budgeted.
"What we have is a set of plans that apparently have a very large number attached to them, but we don't really know the exact additional stimulus that they imply," said Eric Fishwick, a Hong Kong-based economist for CLSA, quoted in Forbes. "It does include lots of things that we already know about. It also includes a lot of things that would've happened regardless...The situation, to be honest, isn't that much different from what it was on Friday."
In today's Post, China correspondents Ariana Eunjung Cha and Maureen Fan write: "The announcement by China's State Council marks a dramatic about-face for the country, which had insisted for months that it was largely unaffected by the increasing economic chaos in the rest of the world and had remained on the sidelines while other nations constructed elaborate bailout plans."
Except the nation is not in great shape, as protests and sit-ins from out-of-work Chinese have told a different story, Cha and Fan write.
Which speaks of the need for some good p.r.
Further, the stimulus plan is heavy on infrastructure spending -- which is fine and probably necessary -- but bridge-and-road-and-dam projects are long-term and do little to stimulate the economy in the short term except to provide jobs.
-- Frank Ahrens
The Ticker is Twittering!
Posted by: JohnDebba | November 10, 2008 5:16 PM | Report abuse
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