While the world was briefly excited about the half-trillion dollar stimulus package announced by the Chinese leadership, further scrutiny might give US farmers pause.
The package earmarks 100 billion yuan of central- government spending this quarter for low-rent housing, infrastructure in rural areas, roads, railways and airports. Investment by local governments and companies may boost that to 400 billion yuan, the State Council said.
The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
Grain purchase prices and subsidies for farmers will be raised, along with allowances for low-income urban households. The government also said it had scrapped loan quotas, which limited lending by banks, to help small businesses. [More]
Hmm - wonder how those domestic subsidies will increase production?
Meanwhile, better mind than mine have developed some skepicism over the whol deal.
Most of this money they would have spent anyway, so what is the net change in the stimulus? And over how many years is this sum spent? I think of this as mostly a public relations move. China wants to tell other countries it is doing lots and it wants to tell its own citizens that it feels their pain and is pro-active.Still, bless their hearts, ya gotta give 'em points for trying. But while we are worried about hardship on our citizens, they are terrified of revolution.
Is there a gentle way to glide down from 10 to 5 percent growth? I tend to doubt it. Are you prepared for a China with negative economic growth for a few years (or more)? I tend to doubt that too. [More]