A New Deal for China?
Time magazine‘s Simon Elegant asks if China’s nearly $600 million stimulus plan is China’s version of the New Deal or not:
“I think in a decade, we’ll be looking back at this moment and saying, ‘This was it. This was when things really changed and China’s economy transitioned from externally, export-oriented to an internal focus,’” says Ben Simpfendorfer, a China economist with the Royal Bank of Scotland in Hong Kong. He Liping, a professor of economics at Peking University, agrees. “I personally see this crisis as an opportunity to reduce our dependence on export and adopt a healthier path,” he says. …
Taken together with the recent expansion of social welfare and amendments to the rural land law that will enable peasants to effectively lease out the right to use their land, the changes amount to a “New Deal with Chinese characteristics,” JPMorgan economist Jing Ulrich wrote in a recent report. They also represent a political triumph for President Hu Jintao and his Premier, Wen Jiabao. The two men have been stressing the importance of measures aimed at relieving poverty in the countryside since coming to office in 2003. Until now, their efforts to enact concrete measures to back those promises have often been frustrated by opponents within the Communist Party who believe the government’s No. 1 priority should be to continue encouragement of booming economic growth.
Over at Time’s China Blog, Elegant gives an example of China’s slowing economy by noting that “the volume of deals at the annual Canton trade fair, China’s biggest and oldest, dropped by 17.9 per cent, the first time the number has declined since the SARs outbreak in 2003.”
Still, The Economist warns that the devil is in the details, and says “Much remains unclear about the implementation of the stimulus plan—even its size.”
According to Sherman Chan, a Sydney-based economist with Moody’s, the real size of the package may not be as large as the government has described. “Some of the measures announced in the stimulus package appear to have been already introduced or even implemented earlier. Hence, the size of this stimulus package—which is expected to be in the form of additional spending—may have been overstated,” Chan wrote in a research note.