[ By Andy Scott, Managing Editor, China Briefing ]
The cooling Chinese economy, which saw growth slow to 9 percent in 2008 (down from 13 percent in 2007), is having a profound effect on the country. Millions of migrant laborers are losing their jobs and domestic stocks are on a roller coaster. As consumer demand for Chinese products dropped worldwide and factories all over South China began to close, Beijing became increasingly concerned with the economic and social stability of the country. In a move to boost the economy in the short term while providing for stable long-term economic development, the State Council, the governments highest executive body, announced a massive RMB4 trillion capital stimulus package on November 9, 2008.
While many details of the plan have yet to be publically disclosed, the National Development and Reform Commission, China’s macroeconomic management agency, did indicate where the bulk of the money will go – towards infrastructure projects. The plan: RMB1.8 trillion is to be used for construction projects including railways, highways, airports and electrical grids; RMB1 trillion will go towards rehabilitating areas devastated by the Sichuan earthquake; RMB370 billion will be directed specifically to rural areas; RMB350 billion will go to the environment; RMB280 billion to prop up the housing market; RMB160 billion for independent innovation; and RMB40 billion for health care and education.
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