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Reason Foundation

China Stimulus Package

Shirley Ybarra
January 22, 2009, 8:15am

An interesting article in the NY Times today about the China Stimulurs pacakage.
In an effort to hold back the domestic effects of the global downturn, China is starting to spend hundreds of billions of dollars on new highways, railroads and other infrastructure projects. The stimulus plan, one of the world's largest, promises to carry the modernity of China's coasts deep into the hinterlands, buying the kind of great leap forward it took the United States decades – and a world war – to build, and priming China for a new level of global competition. As President Obama and Congress draft an $825 billion stimulus plan for the United States, China is already two months into its effort. And while Democrats have put aside calls for big transportation projects, with the House bill allocating less than 5 percent of spending for the construction of highways, rail lines and mass transit programs, China is furiously pouring concrete and laying rails.
And, unlike the United States, China has the cash to pay for it, with few debts and a tiny deficit.
Now Beijing is urging local and provincial governments to go ahead with their projects because they are, in Washington's current parlance, "shovel ready."
A second issue lies in how quickly China can actually accelerate its construction programs, even if the money is available. "This is a very key question," and nobody has the answers, Mr. Feng said. Megaprojects like those now coming off the drawing boards require large numbers of experienced engineers, skilled workers and architects, as well as specialized equipment. A steep swoon in housing construction is starting to put large numbers of laborers out of work but fewer skilled employees.
China's actual incremental spending on economic stimulus is hard to calculate.
The number is large no matter how we look at it.

Shirley Ybarra is Senior Transportation Policy Analyst


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