Beijing joined other governments around the world in cushioning against economic slow, announcing its $586 billion package plan for infrastructure (roads, airports); tax deductions for exporters; increased investment in health, education, environmental protection, and technology; and more generous subsidies for farmers and lower-income individuals.
Behind the announcement of this stimulus plan is Chinese apprehension over facing zero export growth. What this means to China is factory closures and massive layoffs. Exporters report that orders fell to 9% in the last quarter – the lowest in five years – and analysts predict growth will fall to zero, given current and project global demand. As an emerging economy, China feels pressured to create enough jobs to adequately employ millions of workers entering the economy each year. . . who expect steadily rising incomes and an improved standard of living.
“We must implement the measures to ensure a fast and stable economic development,” Premier Wen Jiabao was quoted saying at a government official meeting. “They are not only the needs of the development of ourselves, but also our biggest contribution to the world.”
Originally focused on fighting inflation, recent slows and global economic crises have forced the country to refine its target to include an added measure to ensure fast economic expansion. Recent actions to minimize damage by government officials has included cutting interest rates (three times thus far) and lifiting ceilings on sums that Chinese banks are able to lend. Chinese Premier Wen Jiabao's action plan includes:
These efforts are aimed at increased “social spending” to better distribute wealth to poor, rural areas, and boost consumption.
