Economic Stimulus Package - details released
Here is an article which appeared in yesterday’s China Daily.
Only about 60% of the 4 trillion in the package is listed here, but we know that additional money is going towards propping up the price of grain.
This article also gives us an insight into exactly how big the package is. Compared to 2007 at 13 trillion, 2008 will close out at 16 trillion and 2009 at 18 trillion. This suggests to me that in fact much of the 4 trillion is expenditure which was already announced, perhaps with some programs receiving a boost or an accelerated time frame.
But this also supports our argument that China’s economy is still primarily supported by investments, not by exports. Falling export figures are of course a problem for employment and confidence, but in macro terms the economy is likely to continue to grow as the investments in the stimulus package start to create more jobs.
Here is the article. I have inserted approximate USD values.
Minister of National Development and Reform Commission (NDRC) Zhang Ping has made public the breakdown of China’s four-trillion-yuan stimulus plan, which will cover livelihood improvements, R&D, environmental protection and other sectors.
· 280 billion yuan for housing projects (US$40bn)
· 370 billion yuan to improve people’s lives and infrastructure in rural areas (US$54bn)
· 180 billion yuan to build highways, railroads, and the power grid (US$26bn)
· 40 billion yuan for medical care and education (US$6bn)
· 350 billion yuan for ecological and environmental projects (US$51bn)
· 160 billion yuan to fund R&D and innovation projects (US$23bn)
· 1 trillion yuan for places worst hit by the earthquakes (US$146bn)
The new details of the stimulus plan have been revealed together at the same time as China’s total domestic investment was forecast to reach 18 trillion yuan in 2009. (US$2.6tr)
For 2008 total investment is expected to reach 16 trillion yuan, while last year it was 13 trillion yuan. The four-trillion-yuan stimulus package is just part of all the investment China needs to drive its economy.
Among the financial stimulus plan, 350 billion yuan will be spent on improving the ecological environment and treating pollution, Zhang said. The four-trillion-yuan investment will not be spent in the energy and resource-intensive industries or high-pollution industries.
Zhou Shengxian, minister of environmental protection, said earlier that the main targets of environmental investment will go to beef up rural environmental efforts. He said China’s fledgling green industries, such as those involved in the development of renewable energies and pollution treatment, will also benefit from the investment plan.
Further aspects to the NDRC’s plans to stimulate the economy have also been released, including a review of the fuel tax reform formula, undertaken with other government departments. Once the formula is ready, it will be released to seek public opinion on amendments, said Zhang at the press conference.
“The goal for fuel reform is to highlight four concepts, which are fair taxation, a regulated charging system, energy conservation and less financial burden for people,” Zhang said.
“It is fair that the more people consume oil the more they have to pay for it,” Zhang said. By replacing the maintenance fee for roads, navigation systems and road tolls with a fuel tax, car owners will pay less than before.
“By replacing the fees with fuel taxes, we also hope to regulate road toll stations that used to charge drivers for no legal reason,” he added.
November 28th, 2008 at 11:39 am
[...] Economic Stimulus Package - details released Falling export figures are of course a problem for employment and confidence, but in macro terms the economy is likely to continue to grow as the investments in the stimulus package start to create more jobs. Here is the article. … [...]