China’s State Council approved a massive $862 billion stimulus packageof capital spending and measure to boost consumer spending.
- Massive infrastructure spending on roads, railways, airports and the powergrid
- Land reform for rural farmers to increase incomes
- Social welfare projects such as affordable housing andenvironmental protection.
- Increase in bank lending limits
- Reduction of the value added tax
To put this amount into perspective, it dwarfs the $100billion we spent on last summer’s tax rebates.
China’s stimulus package amounts to nearly 15% of annualeconomic output spread over barely two years. Another yardstick of its scale: In the Asian financial crisis of 1998, China responded with a package worth just 1.2% of gross domestic product.
