Crisis Diary as it unfolds ….

China takes the lead in race to embrace socialism

China, with announcement of its massive stimulus package, has taken lead – and very gleefully so – in a race to embrace socialism.
New York Times says:

At a time when major infrastructure projects are being put off around the world, China said it would spend an estimated $586 billion over the next two years — roughly 7 percent of its gross domestic product each year — to construct new railways, subways and airports and to rebuild communities devastated by an earthquake in the southwest in May.

So when the world is slowing down, China wants to build roads, railways, homes, bridges and be ready with increased potential to rock the world stage again when things get back on track. At least, that looks like the Beijing gameplan. Also, Beijing might be looking to spend its amassed US$ as long as they are accepted and carry some purchasing power in the market place. It’s a beautiful plan in perfect world, but is communist world anywhere near being perfect?
The sheer size of the package, almost 7% of
China‘s GDP, is what surprised most. But it is really unclear how much of this package is on top of already planned spending. If that net factor isn’t substantial, which probably is the case, this announcement is not more than a public statement to show the intent to act.
Never the less. it should be interesting to see how export oriented centrally-planned economy of
China fares when circumstances force it to look inwards and look for domestic growth.

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November 10, 2008 - Posted by | News | , , ,

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