Over the weekend, China has announced it’s own version of the economic stimulus plan. Unlike the US’s plan that gave taxpayers $116 billion dollars, China’s plan is expected to total $586 billion. It’s good to be rich I’d say! Also unlike the US’s plan that gives taxpayers control of how it will be spent, the Chinese will be using the billions of dollars to speed up existing infrastructure projects and social welfare.
Last year, China’s economic growth was 11.9 percent but in the most recent third quarter numbers, it has decreased to only be 9 percent. While this type of number would be celebrated in other countries, it’s not good news for China who need to create jobs for millions of new workers and current workers who has be used to rapidly rising incomes.
What’s more worry some is the fact that while exports has been growing 20 percent annually, next year’s exports might grind to a halt.
This bill includes projects like low-cost housing, something that is desperately needed in a country that still has a huge gap between the rich and the poor. Also on the list of improvements are increased spending on rural infrastructure, railways, roads and airports. Other areas like health and education will also be covered in this plan, as well as environmental protection and technology.
The goal is to increase the income levels of both urban and rural area for the workers. On the business front, commercial banks will be less restricted by having no capital requirements so they can channel more lending to important projects.
Lastly, something I really welcome is that there will be tax cuts by $17.5 billion for enterprises.
While our economic stimulus plan gives everyone a bunch of money to buy useless products like TVs, China’s stimulus plan creates government projects, improves technology and infractructure, create jobs and includes a tax cut.
Maybe it’s time we learn a thing or two from the Chinese.
