Do you need $18 billion?
Do you live in the People's Republic of China, and preferably are in a position to undertake a massive, capital-intensive infrastructure project?
If you answered affirmatively to both these questions, best get in line: That's the imperial sum the Chinese government is prepared to dole out by year's end. That $18 billion is only the first batch out of an enormous stimulus plan--China's biggest, ever--that will dole out a lump sum of 4 trillion RMB ($586-million USD) over the next two years.
Where will all those wads of yuan go? That's still kind of vague: Beijing has made references to addressing the post-quake devastation in Sichuan province, low-income housing, electricity, water, rural infrastructure, environmental protection and technological innovation--the kind of keywords most governments like to toss around in official statements. But it isn't clear how much of this will be direct government-to-project spending, and how much will be channelled through largely nationalized banks and lending institutions.
Either way, the idea is this cash will jump-start not only China's slowing powerhouse economy, but also give the global economy a kick in the pants as one country after another (sorry, Japan) slips into recession.
Or, at least, that's what Hu Jintao and just about every finance minister in the world is hoping.
The announcement came at a pretty fateful moment, as leaders of the Group of 20 met in Brazil to commiserate and try to hash a way out of this global economic mess. The only thing summit made patently clear, however, was that the so-called "developing" economies at the table--notably the swiftly growing BRIC (Brazil, Russia, India and China)--want a hand in drafting a rescue plan. They all more or less agree with Brazilian president Luiz Inacio Lula da Silva's statement that the financial crisis "originated in the advanced countries." Damned if these states are going to return to the sidelines, awaiting whatever sadistically termed medical-sounding procedure the IMF proscribes for their ailing economies (Lobotomy? Enema? Or just shock therapy, part II?). They want a sizable say in whatever goes on from here on in, and they know they have the power to demand it.
The major G7 powers know it, too: IMF head honcho Dominique Strauss-Kahn admitted the international body needs to protect growth in developing countries, because it's likely the only economic growth the globe is going to see for the next little while.
At least in China's case, though, that upward movement isn't nearly enough. The Red Machine's economy was surging more than 10 per cent in the first couple of quarters of this year, compared to 2007; now that's brushing dangerously close the magic eight per cent growth analysts say China's economy needs to sustain just to keep its mammoth population employed.
People here are freaking out, in a calm kind of way. A student I met on a train was counting on his internship with Bosch turning into a full-time gig; now that Bosch has trashed its plans to hire more employees in its Nanjing office, he's panicking. And he's not alone: A guidance counsellor and PhD student here at Fudan says the students she's seeing are growing increasingly desperate because there simply aren't any job openings. Add to that the thousands laid off as more than half the country's toy stores closed this fall and you have a lot of panicked people; so much for a harmonious society.
As demand for Chinese goods drops globally, everyone's hoping Chinese consumers will pull through and make up for the drop in purchasing elsewhere.
It sounds like a good idea given the rise, over the past few years, in demand for such higher-end consumer goods as cars and cell phones. But China's large industrial output (which is still way less, proportionately, than it was in 1800) belies its small per capita income--most people don't have the extra cash they would need to consume like Americans. Old habits die hard for millions of people raised under the Great Leap Forward, whose primary aim was to keep consumption as low as humanly possible (often fatally lower) while focusing on heavy industry. Now, Chinese people are statistically more likely to save, and to save more, than their North American counterparts. That's probably a good trait to have, except when you need a ginormous spending spree just to keep the financial world turning on its axis.
Perhaps at least a few million of that 4 trillion kwai would be best spent on posters: "Support a harmonious Chinese society: Buy more stuff!"
Do you live in the People's Republic of China, and preferably are in a position to undertake a massive, capital-intensive infrastructure project?
If you answered affirmatively to both these questions, best get in line: That's the imperial sum the Chinese government is prepared to dole out by year's end. That $18 billion is only the first batch out of an enormous stimulus plan--China's biggest, ever--that will dole out a lump sum of 4 trillion RMB ($586-million USD) over the next two years.
Where will all those wads of yuan go? That's still kind of vague: Beijing has made references to addressing the post-quake devastation in Sichuan province, low-income housing, electricity, water, rural infrastructure, environmental protection and technological innovation--the kind of keywords most governments like to toss around in official statements. But it isn't clear how much of this will be direct government-to-project spending, and how much will be channelled through largely nationalized banks and lending institutions.
Either way, the idea is this cash will jump-start not only China's slowing powerhouse economy, but also give the global economy a kick in the pants as one country after another (sorry, Japan) slips into recession.
Or, at least, that's what Hu Jintao and just about every finance minister in the world is hoping.
The announcement came at a pretty fateful moment, as leaders of the Group of 20 met in Brazil to commiserate and try to hash a way out of this global economic mess. The only thing summit made patently clear, however, was that the so-called "developing" economies at the table--notably the swiftly growing BRIC (Brazil, Russia, India and China)--want a hand in drafting a rescue plan. They all more or less agree with Brazilian president Luiz Inacio Lula da Silva's statement that the financial crisis "originated in the advanced countries." Damned if these states are going to return to the sidelines, awaiting whatever sadistically termed medical-sounding procedure the IMF proscribes for their ailing economies (Lobotomy? Enema? Or just shock therapy, part II?). They want a sizable say in whatever goes on from here on in, and they know they have the power to demand it.
The major G7 powers know it, too: IMF head honcho Dominique Strauss-Kahn admitted the international body needs to protect growth in developing countries, because it's likely the only economic growth the globe is going to see for the next little while.
At least in China's case, though, that upward movement isn't nearly enough. The Red Machine's economy was surging more than 10 per cent in the first couple of quarters of this year, compared to 2007; now that's brushing dangerously close the magic eight per cent growth analysts say China's economy needs to sustain just to keep its mammoth population employed.
People here are freaking out, in a calm kind of way. A student I met on a train was counting on his internship with Bosch turning into a full-time gig; now that Bosch has trashed its plans to hire more employees in its Nanjing office, he's panicking. And he's not alone: A guidance counsellor and PhD student here at Fudan says the students she's seeing are growing increasingly desperate because there simply aren't any job openings. Add to that the thousands laid off as more than half the country's toy stores closed this fall and you have a lot of panicked people; so much for a harmonious society.
As demand for Chinese goods drops globally, everyone's hoping Chinese consumers will pull through and make up for the drop in purchasing elsewhere.
It sounds like a good idea given the rise, over the past few years, in demand for such higher-end consumer goods as cars and cell phones. But China's large industrial output (which is still way less, proportionately, than it was in 1800) belies its small per capita income--most people don't have the extra cash they would need to consume like Americans. Old habits die hard for millions of people raised under the Great Leap Forward, whose primary aim was to keep consumption as low as humanly possible (often fatally lower) while focusing on heavy industry. Now, Chinese people are statistically more likely to save, and to save more, than their North American counterparts. That's probably a good trait to have, except when you need a ginormous spending spree just to keep the financial world turning on its axis.
Perhaps at least a few million of that 4 trillion kwai would be best spent on posters: "Support a harmonious Chinese society: Buy more stuff!"
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