The Chinese government has approved a massive spending package, with 450 billion euros being pledged to help the world’s fourth biggest economy ride out the economic crisis.
It will be used mostly for infrastructure and social projects over the next two years. Beijing said it wants to help support global growth by boosting Chinese investment and consumer spending.
The Chinese economy was red hot in the last two years, but growth this year is predicted to be 9.7 percent, cooling to 8.5 percent next year. However economists point out much of the stimulus package involves money that was already announced.
Reuters China Economics Editor Alan Wheatley said: “The devil is in the detail. It depends how it will be implemented. But assuming that this package is genuine, that there is a lot of genuinely new spending, then all other things being equal, it will increase demand for commodities, for steel, for copper, for everything else that China has to import from Asia and the rest of the world.
Stalled worldwide demand for Chinese made products has led to a slump in export markets. It has meant a new economic reality for China’s businesses that until recently were struggling to keep up with soaring demand.