首页 > > WOW, it’s gone be a really HUGE stimulus package

WOW, it’s gone be a really HUGE stimulus package

2008年11月10日 留下评论 Go to comments

economic stimulus

这篇是我练习英文的东西,没什么新观点,只有语法错误,大家飘过就可以了。

After paying so much attention to the other side of Pacific, it’s time to take a closer look at the Chinese economy, and there are good reasons: while the American and the European are fighting with the credit crunch, China has its own problems: export is slowing, capital market is facing new low, and real estate industry is on the cliff. For most of these problems, credit crunch is only the last straw, more crucial is the economy’s high dependence on the export as well as the unequal development between East and West, and the dualistic social structure.

So today the State Council announced the first step to solve these problems, a really big one: a stimulus package worth 4 trillion RMB, or about 570 billion $.

We have talked about the two major problems: export and domestic consumption, and the whole stimulus package from the gov is clearly aiming to address these problems:

Tax cut and encouraging lending of commercial banks are helping the export companies to survive, and more important, to evolve. The commercial banks’ lending should concentrate more on the priority projects, rural areas, smaller enterprises, technical innovation and industrial rationalization through mergers and acquisitions. That means the financial system should be a proper force in supporting more value-added and innovative companies, instead of saving the dead part. A potential problem of the forthcoming credit expansion is, as we know there are big gap between the economic regulation of the central gov and the "best practices" of the local gov, it is questionable, in which degree the correct priority of lending will be kept. Lending to smaller enterprises may seems associated with higher risk than to SOE, and companies with technical innovation are also companies with high volatility in value, which is not always a good thing for banks, and after all, lending in the desired areas of this stimulus package requires a long term commitment of the local gov.

– Over the next two years, programs in 10 major areas will be strongly supported by the gov, inc. low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters (like the May 12 earthquake). These investments are not only the direct way to increase GDP, but more importantly, they can hopefully create more consumptions, which is till now the weakest part in GDP growth. People generally don’t go to shop for two reasons: either they don’t have money, like the vast majority in the rural areas; or they have money, but don’t dare to spend it, because of the fragment social security system, health care system, shy-high house price, and the high tuition of universities etc. The investments in rural areas can probably solve the first part of the problem, but it depends on how the investments are made. Actually, like the FDI from developed countries was indispensible for the quick development in the coast zone of China, investments from the gov into the rural areas should also focus on giving FDI and more private investments from the East incentives to come to the less developed areas. And for the second part of the problem, which may have a more crucial influence on the overall economic development in the short term, the best way for stimulation should be building a better social security system and health care system, and of course, low-income housing and tax cut (mainly for industry and corporate) both address this problem.

On its own web site, gov described the macro-economic policy changes announced with the whole stimulus package "one of only a few major shifts during the 30 years since the beginning of reform and opening up in 1978".

Well, the whole plan seems pretty good. But there is one simple question I cannot answer: where will the money come from? And another thing one shouldn’t forget is, only 3 months ago our PPI had a growth rate of 10%, how to stimulate the economy and offset the potential inflation is and will still be a big question.

For more information and comments, you can read this article in Bloomberg.

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  1. Hareton
    2008年11月10日 @ 1:36 上午

    sf
    comprend rien

  2. Qianrong
    2008年11月10日 @ 8:37 上午

    I cannot answer the first question, presumably from existing fiscal income? As for the second one, the economic situation has changed a lot during the three months and actually China is battling potential deflation now. Surely some areas still needs regulation against over-heated investment, but basically inflation is not the topic now.

  3. Kun
    2008年11月10日 @ 1:39 下午

    "Where will the money come from?"…..er, I think, may be from the moon or the sun!
    What a fucking question, dude!  Rules Nr.1: " Never ask the fucking resource of the fucking money…"

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