A Year Later, China’s Stimulus Package Bears Fruit
The New York Times reports on the success of China’s stimulus funding, achieved by leaders who are, “unfettered by public opinion, partisan squabbling or parliamentary opposition”:
The stimulus package, announced in November, promised 4 trillion yuan, or $585 billion, in spending over the following two years. As details trickled out, it became clear that public spending on large-scale infrastructure was to be a huge part of the mix.
Other recession-struck governments around the world had to struggle to find and fund enough so-called “shovel-ready” projects to stimulate the creation of construction jobs. But China, with countless such projects already on the drawing boards, faced no such dilemma.
So many plans, indeed, were already in place for new ports, bridges, water projects, power plants, roads and rail lines, that some critics suggested the package might not represent much new spending after all — a skepticism not diminished by China’s opaque public accounts. Still, new money or not, the construction sites were opened and people went to work. In the first eight months of this year, spending on fixed investment rose 33 percent in nominal terms over spending in the same period last year, according to recent research by JPMorgan Chase.
Recent months have seen some slowdown of investment in mining and manufacturing, but investment in railroads continues to soar, notching up a growth rate of more than 103 percent for the first eight months of this year. By the end of this year, China will probably have spent $50 billion on its nationwide high-speed rail network alone.