XinHua News Agency
China plans 10 major steps to spark growth as fiscal, monetary policies ease
2008-11-09 22:56:15
BEIJING, Nov. 9 (Xinhua) -- China will take 10 major steps to stimulate domestic consumption and growth as it turns to an "active" fiscal policy and "moderately easy" monetary policy, an executive meeting of the State Council said on Sunday.
Here are the 10 major steps:
-- Housing: Building more affordable and low-rent housing and speeding the clearing of slums. A pilot program to rebuild rural housing will expand. Nomads will be encouraged to settle down.
-- Rural infrastructure: Speeding up rural infrastructure construction. Roads and power grids in the countryside will be improved, and efforts will be stepped up to spread the use of methane and to ensure drinking water safety. This part of the plan also involves expediting the North-South water diversion project. Risky reservoirs will be reinforced. Water conservation in large-scale irrigation areas will be strengthened. Poverty relief efforts will be increased.
-- Transportation: Accelerating the expansion of the transport network. That includes more dedicated passenger rail links and coal routes. Trunk railways will be extended and more airports will be built in western areas. Urban power grids will be upgraded.
-- Health and education: Beefing up the health and medical service by improving the grass roots medical system. Accelerating the development of the cultural and education sectors and junior high school construction in rural western and central areas. More special education and cultural facilities.
-- Environment: Improving environmental protection by enhancing the construction of sewage and rubbish treatment facilities and preventing water pollution in key areas. Accelerating green belt and natural forest planting programs. Increasing support for energy conservation and pollution-control projects.
-- Industry: Enhancing innovation and industrial restructuring and supporting the development of the high-tech and service industries.
-- Disaster rebuilding: Speeding reconstruction in the areas hit by the May 12 earthquake.
-- Incomes: Raising average incomes in rural and urban areas. Raising next year's minimum grain purchase and farm subsidies. Increasing subsidies for low-income urban residents. Increasing pension funds for enterprise employees and allowances for those receiving special services.
-- Taxes: Extending reforms in value-added tax rules to all industries, which could cut the tax corporate burden by 120 billion yuan (about 17.6 billion U.S. dollars). Technological upgrading will be encouraged.
-- Finance: Enhancing financial support to maintain economic growth. Removing loan quotas on commercial lenders. Appropriately increasing bank credit for priority projects, rural areas, smaller enterprises, technical innovation and industrial rationalization through mergers and acquisitions.
These 10 moves are expected to have positive effects on cement, iron and steel producers amid a boom in infrastructure investment. Commercial lenders will benefit as loan ceilings are abolished, and medium-sized and small companies are likely to benefit from preferential policies.
Editor: Sun
Showing posts with label Stimulus Package. Show all posts
Showing posts with label Stimulus Package. Show all posts
Thursday, November 13, 2008
Wednesday, November 12, 2008
George Soros: Global financial crisis has bottomed
George Soros in his recent interview with the Estonia media said that the global credit crisis has bottomed and the financial systems are on the self healing stage.
George Soros said that with the filing for bankruptcy of Lehman Brothers, the financial system that has stopped functioning before that has started to work again. But he also mentioned that the unemployment, the survival of the companies and other financial problems arising from the crisis will still continue to happen.
Regarding this crisis, George Soros mentioned that this is the biggest crisis he has ever seen in his life time. He said that he has never seen such a crisis before and he will not see another such crisis again.
To those points by George Soros, secretary general from the Academy of Social Sciences International Financial Research Center 张明 said in an interview with the Chinese media that he basically agrees with what George Soros have said. 张明 thinks that although the financial market will still have some pitfalls, it needs time to stabalize but the big fluctuations in September period will not occur again. After the big fluctuations in September, with the mesures taken by various countries, the banking credit system is starting to show signs of recovery, the banks self healing process can be seen. But 张明 also points out that the current crisis effect on the real economy will need a longer time to recover. The recovery process will take at least 3 to 5 years. The impact to the real economy has just only begun.
Market analysts said that under the current panic period where people are selling their stocks, George Soros and another investing master Warren Buffett have been buying up big companies stocks around the world. Their buy ups stretches from the US to Australia. They are looking for seeds in the market which can provide long term returns. Recently Buffett spent 5 billion USD investing in Goldman Sachs and invested another 3 billion USD in GE. And in last month, Buffett in an article in The New York Times said that he has started to buy US stocks and suggests investors to start investing in the US stock market. George Soros has also started buying 5% of Australia's Sphere Investments. Sphere Investments is preparing to develope a metal mining project worth billions of USD in Mauritania.
Rebound of German Investor Confidence Index
The ZEW Center for European Economic Research in Mannheim announced yesterday the November 2008 Germany's Investor Confidence Index. The data shows that becuase of the Europe Central Bank action in reducing the interest rates and the determination of the German government to stimulate the economy, Germany's Investor Confidence Index shown a rebound from October's -63 to November's -53.5. Analysts expectation were -63.
The German government this month started implementing its 500 billion Euros economic stimulus plan. The German DAX started to rebound last month from its 3 years low. At the same time, the Euro inter-bank lending rates has dropped the lowest point since February.
Frankfurt Commerzbank AG economist Ralph Solveen thinks that investor confidence has reached a turning point. But this will not change the gloomy situation for Germany's economy in the coming few months because the Investor Confidence Index historical average value is -27.1 and currently it has been negative for 16 months consecutively. Also, a gauge measuring investors' assessment of the current situation fell to minus 50.4 from minus 35.9 in October. The Euro November ZEW economic index is -54, expectation was -60.5.
George Soros said that with the filing for bankruptcy of Lehman Brothers, the financial system that has stopped functioning before that has started to work again. But he also mentioned that the unemployment, the survival of the companies and other financial problems arising from the crisis will still continue to happen.
Regarding this crisis, George Soros mentioned that this is the biggest crisis he has ever seen in his life time. He said that he has never seen such a crisis before and he will not see another such crisis again.
To those points by George Soros, secretary general from the Academy of Social Sciences International Financial Research Center 张明 said in an interview with the Chinese media that he basically agrees with what George Soros have said. 张明 thinks that although the financial market will still have some pitfalls, it needs time to stabalize but the big fluctuations in September period will not occur again. After the big fluctuations in September, with the mesures taken by various countries, the banking credit system is starting to show signs of recovery, the banks self healing process can be seen. But 张明 also points out that the current crisis effect on the real economy will need a longer time to recover. The recovery process will take at least 3 to 5 years. The impact to the real economy has just only begun.
Market analysts said that under the current panic period where people are selling their stocks, George Soros and another investing master Warren Buffett have been buying up big companies stocks around the world. Their buy ups stretches from the US to Australia. They are looking for seeds in the market which can provide long term returns. Recently Buffett spent 5 billion USD investing in Goldman Sachs and invested another 3 billion USD in GE. And in last month, Buffett in an article in The New York Times said that he has started to buy US stocks and suggests investors to start investing in the US stock market. George Soros has also started buying 5% of Australia's Sphere Investments. Sphere Investments is preparing to develope a metal mining project worth billions of USD in Mauritania.
Rebound of German Investor Confidence Index
The ZEW Center for European Economic Research in Mannheim announced yesterday the November 2008 Germany's Investor Confidence Index. The data shows that becuase of the Europe Central Bank action in reducing the interest rates and the determination of the German government to stimulate the economy, Germany's Investor Confidence Index shown a rebound from October's -63 to November's -53.5. Analysts expectation were -63.
The German government this month started implementing its 500 billion Euros economic stimulus plan. The German DAX started to rebound last month from its 3 years low. At the same time, the Euro inter-bank lending rates has dropped the lowest point since February.
Frankfurt Commerzbank AG economist Ralph Solveen thinks that investor confidence has reached a turning point. But this will not change the gloomy situation for Germany's economy in the coming few months because the Investor Confidence Index historical average value is -27.1 and currently it has been negative for 16 months consecutively. Also, a gauge measuring investors' assessment of the current situation fell to minus 50.4 from minus 35.9 in October. The Euro November ZEW economic index is -54, expectation was -60.5.
Monday, November 10, 2008
China's $586 billion USD stimulus plan hailed
The Straits Times
Nov 10, 2008 7:28 PM
China's stimulus hailed
BEIJING - INVESTORS welcomed China's multibillion-dollar stimulus package but analysts said on Monday the plan will depend on Chinese companies to supply a big share of the spending.
Stock markets in Japan, Hong Kong and mainland China soared after Sunday's announcement of the 4 trillion yuan, or $586 billion (S$877 billion), package as Beijing joined moves by governments around the world to cushion the blow of the global slowdown.
The plan calls for higher government spending on roads, airports and other infrastructure, tax deductions for exporters and bigger subsidies to the poor and farmers. Spending on health and education will be increased, as well as on environmental protection and high technology.
But it also depends on corporate investment and promises bank lending for rural projects, smaller companies and consumers.
'I don't believe a fiscal stimulus alone is enough to keep growth going. I see it as the jump-starting of a car. Corporate investment and bank lending are the fuel that will be necessary to keep it going,' said UBS Securities economist Tao Wang.
Beijing might supply one-quarter of the announced spending, or 1 trillion yuan (S$212 billion), with the rest coming from increased investment by Chinese state companies, bank lending or bond sales by local authorities for individual projects, said Mr Ting Lu, a Merrill Lynch economist.
'Many state companies have a lot of cash. They just need to use it,' Mr Lu said.
China's announcement came as economic officials from the Group of 20 leading economies, which includes major wealthy and developing nations, called on Sunday for increased government spending to boost the troubled global economy.
At a meeting in Brazil, G20 finance ministers and central bank governors also said emerging economies deserve a prominent role in talks to overhaul the world financial system.
China's move follows an unexpectedly sharp downturn in economic growth that has raised the prospect of job losses and unrest.
Exporters say orders have fallen sharply, leading to an increase in factory closures and layoffs. Chinese economic growth fell to 9 per cent in the latest quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens.
The plan represents another drastic step away from lending curbs and other anti-inflation measures that Beijing imposed over the past three years but has been rolling back since mid-2008 as government alarm about slowing economic growth mounts.
British Prime Minister Gordon Brown welcomed China's move and said he looked forward to discussion of coordinating policy at a Washington meeting this coming weekend of leaders from the Group of 20 major economies. Chinese President Hu Jintao is due to attend.
News of the plan sparked rallies on many Asian markets, with the Shanghai Composite index - which has plunged by two-thirds since it peaked last October - jumping 7.3 per cent to 1,874.80. Japan's Nikkei 225 index surged 5.8 per cent to 9,081.43.
It also lifted sagging oil prices on hopes that it would stimulate energy demand.
Oil rose $2.69 to $63.70 a barrel in Asian trading on the New York Mercantile exchange.
Also on Monday, the government said China's wholesale inflation eased in October, which gives authorities more leeway to stimulate the economy without the threat that they might ignite new price rises. Producer prices rose 6.6 per cent in October from the year-earlier period, down from August's 12-year high of 10.1 per cent.
Alarmed at falling growth, the government switched its official goal in mid-2008 from a single focus on fighting inflation to a dual target of ensuring fast economic expansion while also containing price rises. It has cut interest rates three times in recent weeks and lifted limits on how much each Chinese bank can lend.
The government's announcement appears to exaggerate the size of its plan by including projects already under way, including reconstruction from the devastating May earthquake in China's southwest, said Mr Sherman Chan, an economist for Moody's Economy.com.
'The exaggeration highlights the government's desperation to revive sentiment, which is perhaps the key factor to sustaining growth amid global turmoil,' Mr Chan said in a report. -- AFP
Nov 10, 2008 7:28 PM
China's stimulus hailed
BEIJING - INVESTORS welcomed China's multibillion-dollar stimulus package but analysts said on Monday the plan will depend on Chinese companies to supply a big share of the spending.
Stock markets in Japan, Hong Kong and mainland China soared after Sunday's announcement of the 4 trillion yuan, or $586 billion (S$877 billion), package as Beijing joined moves by governments around the world to cushion the blow of the global slowdown.
The plan calls for higher government spending on roads, airports and other infrastructure, tax deductions for exporters and bigger subsidies to the poor and farmers. Spending on health and education will be increased, as well as on environmental protection and high technology.
But it also depends on corporate investment and promises bank lending for rural projects, smaller companies and consumers.
'I don't believe a fiscal stimulus alone is enough to keep growth going. I see it as the jump-starting of a car. Corporate investment and bank lending are the fuel that will be necessary to keep it going,' said UBS Securities economist Tao Wang.
Beijing might supply one-quarter of the announced spending, or 1 trillion yuan (S$212 billion), with the rest coming from increased investment by Chinese state companies, bank lending or bond sales by local authorities for individual projects, said Mr Ting Lu, a Merrill Lynch economist.
'Many state companies have a lot of cash. They just need to use it,' Mr Lu said.
China's announcement came as economic officials from the Group of 20 leading economies, which includes major wealthy and developing nations, called on Sunday for increased government spending to boost the troubled global economy.
At a meeting in Brazil, G20 finance ministers and central bank governors also said emerging economies deserve a prominent role in talks to overhaul the world financial system.
China's move follows an unexpectedly sharp downturn in economic growth that has raised the prospect of job losses and unrest.
Exporters say orders have fallen sharply, leading to an increase in factory closures and layoffs. Chinese economic growth fell to 9 per cent in the latest quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens.
The plan represents another drastic step away from lending curbs and other anti-inflation measures that Beijing imposed over the past three years but has been rolling back since mid-2008 as government alarm about slowing economic growth mounts.
British Prime Minister Gordon Brown welcomed China's move and said he looked forward to discussion of coordinating policy at a Washington meeting this coming weekend of leaders from the Group of 20 major economies. Chinese President Hu Jintao is due to attend.
News of the plan sparked rallies on many Asian markets, with the Shanghai Composite index - which has plunged by two-thirds since it peaked last October - jumping 7.3 per cent to 1,874.80. Japan's Nikkei 225 index surged 5.8 per cent to 9,081.43.
It also lifted sagging oil prices on hopes that it would stimulate energy demand.
Oil rose $2.69 to $63.70 a barrel in Asian trading on the New York Mercantile exchange.
Also on Monday, the government said China's wholesale inflation eased in October, which gives authorities more leeway to stimulate the economy without the threat that they might ignite new price rises. Producer prices rose 6.6 per cent in October from the year-earlier period, down from August's 12-year high of 10.1 per cent.
Alarmed at falling growth, the government switched its official goal in mid-2008 from a single focus on fighting inflation to a dual target of ensuring fast economic expansion while also containing price rises. It has cut interest rates three times in recent weeks and lifted limits on how much each Chinese bank can lend.
The government's announcement appears to exaggerate the size of its plan by including projects already under way, including reconstruction from the devastating May earthquake in China's southwest, said Mr Sherman Chan, an economist for Moody's Economy.com.
'The exaggeration highlights the government's desperation to revive sentiment, which is perhaps the key factor to sustaining growth amid global turmoil,' Mr Chan said in a report. -- AFP
Sunday, November 9, 2008
China's $586 billion USD stimulus plan
The Straits Times
BEIJING - CHINA on Sunday unveiled an economic stimulus plan and said it would adopt a more aggressive fiscal approach in a major policy shift amid a worrying slowdown in economic growth.
The measures were approved at a cabinet meeting chaired by Premier Wen Jiabao on Wednesday, state media said, and would hike spending for agriculture, infrastructure and other sectors to ward off the global financial crisis.
'China has decided to adopt an active fiscal policy and moderately easy monetary policies to foster fast but steady economic growth by expanding domestic demand,' Xinhua news agency said.
The spending package would total four trillion yuan (S$877.24 billion) by the end of 2010, including monies already earmarked this year, Xinhua news agency said.
State media reports on the measures said they were aimed at spurring domestic consumption. They come amid slackening overseas demand for China's economically vital manufactured goods.
'Although we face many difficulties, domestic spending power remains strong,' state-run CCTV quoted the meeting as saying.
The move is the latest in a series of steps taken by China in recent months to lessen the impact of the global financial crisis amid slowing growth at home.
China's economic growth eased to nine percent in the third quarter of this year, the lowest in around five years, partly due to slowing exports.
The central bank has also cut interest rates three times since September, twice lowered the ratio of money commercial banks have to keep in reserve and removed loan caps to encourage investment.
Those steps marked an about-face from a policy of raising rates and other steps aimed at cooling the economy amid growing inflation and fears of overheating.
As part of its efforts to boost domestic demand, the State Council, or cabinet, also recently approved a plan to spend two trillion yuan on construction of new railways from now until 2020.
The new approach mirrors similar policies taken between 1998 and 2004 to cope with the effects of the 1997-98 Asian financial crisis.
Those measures included issuing large amounts of treasury bonds and ramping up public investment.
The new spending will be directed at a broad range of areas including construction of railroads, highways and airports, boosting the services sector, and upgrading power grids, CCTV said.
Money also would be poured into social welfare systems including education and public health, it said.
However, the reports gave no breakdown on how much would be spent in each area. -- AFP
Nov 9, 2008 |
US$586b stimulus planBEIJING - CHINA on Sunday unveiled an economic stimulus plan and said it would adopt a more aggressive fiscal approach in a major policy shift amid a worrying slowdown in economic growth.
The measures were approved at a cabinet meeting chaired by Premier Wen Jiabao on Wednesday, state media said, and would hike spending for agriculture, infrastructure and other sectors to ward off the global financial crisis.
'China has decided to adopt an active fiscal policy and moderately easy monetary policies to foster fast but steady economic growth by expanding domestic demand,' Xinhua news agency said.
The spending package would total four trillion yuan (S$877.24 billion) by the end of 2010, including monies already earmarked this year, Xinhua news agency said.
State media reports on the measures said they were aimed at spurring domestic consumption. They come amid slackening overseas demand for China's economically vital manufactured goods.
'Although we face many difficulties, domestic spending power remains strong,' state-run CCTV quoted the meeting as saying.
The move is the latest in a series of steps taken by China in recent months to lessen the impact of the global financial crisis amid slowing growth at home.
China's economic growth eased to nine percent in the third quarter of this year, the lowest in around five years, partly due to slowing exports.
The central bank has also cut interest rates three times since September, twice lowered the ratio of money commercial banks have to keep in reserve and removed loan caps to encourage investment.
Those steps marked an about-face from a policy of raising rates and other steps aimed at cooling the economy amid growing inflation and fears of overheating.
As part of its efforts to boost domestic demand, the State Council, or cabinet, also recently approved a plan to spend two trillion yuan on construction of new railways from now until 2020.
The new approach mirrors similar policies taken between 1998 and 2004 to cope with the effects of the 1997-98 Asian financial crisis.
Those measures included issuing large amounts of treasury bonds and ramping up public investment.
The new spending will be directed at a broad range of areas including construction of railroads, highways and airports, boosting the services sector, and upgrading power grids, CCTV said.
Money also would be poured into social welfare systems including education and public health, it said.
However, the reports gave no breakdown on how much would be spent in each area. -- AFP
Friday, November 7, 2008
Economists say Singapore government could increase spending by S$10b
Channel News Asia
Economists say government could increase spending by S$10b
By Wong Siew Ying, Channel NewsAsia | Posted: 07 November 2008 2015 hrs
SINGAPORE: Economists expect Singapore's government to increase its spending by up to S$10 billion next year.
Senior Minister Goh Chok Tong said on Thursday that the next budget will be an "expansionary" one, which means the government will be spending more and collecting less.
With corporate earnings hit by the economic slowdown, analysts said on Friday that the private sector will scale back significantly on spending and investment.
Song Seng Wun, CEO & regional economist, CIMB-GK Research, said: "Financing is not a problem. Since the new term, the government has been able to record fairly substantial surpluses and with the change in constitution, it allows them to dip into reserves. They do have a larger war chest to deal with this downturn."
One way to pump-prime the economy is to keep infrastructure projects flowing.
Market watchers said the government is likely to start public sector projects which were deferred earlier. About S$4.7 billion worth of projects were held back till 2010 to ease pressure on the construction sector.
The government is also expected to inject more funds into the research and bio-medical sector, which is likely to create more jobs.
Analysts said the government could also help individuals and companies by offering tax incentives. They do not rule out a reduction in the Goods and Services Tax (GST), which will go some way to help lower the cost of living.
Older workers, in particular, may be given an extra lift through the Workfare Bonus Scheme – a programme to encourage low-wage workers to take on jobs.
Heng Chee How, deputy secretary-general of NTUC, said: "In a recession, it (workfare bonus) is something that you could look at because cash flow is something that workers are also concerned about."
Analysts said needy families are also likely to get more assistance through a range of rental and utility rebates.
On the whole, they expect many of the potential budgetary measures to be one-offs, designed to help cushion the impact of the downturn.
- CNA/so
Economists say government could increase spending by S$10b
By Wong Siew Ying, Channel NewsAsia | Posted: 07 November 2008 2015 hrs
SINGAPORE: Economists expect Singapore's government to increase its spending by up to S$10 billion next year.
Senior Minister Goh Chok Tong said on Thursday that the next budget will be an "expansionary" one, which means the government will be spending more and collecting less.
With corporate earnings hit by the economic slowdown, analysts said on Friday that the private sector will scale back significantly on spending and investment.
Song Seng Wun, CEO & regional economist, CIMB-GK Research, said: "Financing is not a problem. Since the new term, the government has been able to record fairly substantial surpluses and with the change in constitution, it allows them to dip into reserves. They do have a larger war chest to deal with this downturn."
One way to pump-prime the economy is to keep infrastructure projects flowing.
Market watchers said the government is likely to start public sector projects which were deferred earlier. About S$4.7 billion worth of projects were held back till 2010 to ease pressure on the construction sector.
The government is also expected to inject more funds into the research and bio-medical sector, which is likely to create more jobs.
Analysts said the government could also help individuals and companies by offering tax incentives. They do not rule out a reduction in the Goods and Services Tax (GST), which will go some way to help lower the cost of living.
Older workers, in particular, may be given an extra lift through the Workfare Bonus Scheme – a programme to encourage low-wage workers to take on jobs.
Heng Chee How, deputy secretary-general of NTUC, said: "In a recession, it (workfare bonus) is something that you could look at because cash flow is something that workers are also concerned about."
Analysts said needy families are also likely to get more assistance through a range of rental and utility rebates.
On the whole, they expect many of the potential budgetary measures to be one-offs, designed to help cushion the impact of the downturn.
- CNA/so
Thursday, November 6, 2008
JP Morgan: China may issue 550 billion yuan government bonds to stimulate economy
JP Moargan yesterday issued a report saying that the Chinese government may issue 550 billion yuan worth of government bonds in order to stimulate the economy. But on the search for new breakthroughs for the China economy growth, there are still some disputes within the local academics.
In the report, it says that China's current financial situation is much stronger than the 1997 Asia financial crisis and the economic downturn 8 years ago. But this time the downturn's underlying risks are much higher than before. So the financial expenditure plan for this time may be much bigger. The estimated financial expenditure may be equivalent to about 1.2%-2.0% of China's GDP.
Frank Gong, Managing director, Head of Research Division, China's Chief Economist with JP Morgan said before in August that current China's economic situation is only at the beginning of autumn. The worrying deep cold winter has not come yet. In the report, Frank Gong mentioned that it still needs observation whether the current situation will follow the downturn trend of the 80s in the last century. China manufacturing industry is already facing tough times and thus the government departments must have foresight and quickly come out with plans and policies to help stimulate the economy.
The downturn of the China economy for 2H 2008 has raised big concerns for the Chinese government. According to media reports, after the approval of the plan to spend two trillion yuan on construction of new railways, China is considering a plan to invest five trillion yuan in the transport sector in the next three to five years. In actual fact, the reliance on transport, railway and such projects in the past have been used to stimulate economic growth and is accepted by most economists that it will work.
Academy of Social Sciences Research Center for the less developed regions director 袁钢明 in his blog says that comparing to the railway and transport big projects, people's livelihood as the breakthrough point to stimulate the economy will be more suitable for the current China's economic situation. He believes that the effect for the investments on railway and transport now will be greatly discounted. In contrast, the people's livelihood-related stuff such as welfare housing and rural roads buidup are the weak links in current government investments, such investments can be main points to increase domestic demand.
In the report, it says that China's current financial situation is much stronger than the 1997 Asia financial crisis and the economic downturn 8 years ago. But this time the downturn's underlying risks are much higher than before. So the financial expenditure plan for this time may be much bigger. The estimated financial expenditure may be equivalent to about 1.2%-2.0% of China's GDP.
Frank Gong, Managing director, Head of Research Division, China's Chief Economist with JP Morgan said before in August that current China's economic situation is only at the beginning of autumn. The worrying deep cold winter has not come yet. In the report, Frank Gong mentioned that it still needs observation whether the current situation will follow the downturn trend of the 80s in the last century. China manufacturing industry is already facing tough times and thus the government departments must have foresight and quickly come out with plans and policies to help stimulate the economy.
The downturn of the China economy for 2H 2008 has raised big concerns for the Chinese government. According to media reports, after the approval of the plan to spend two trillion yuan on construction of new railways, China is considering a plan to invest five trillion yuan in the transport sector in the next three to five years. In actual fact, the reliance on transport, railway and such projects in the past have been used to stimulate economic growth and is accepted by most economists that it will work.
Academy of Social Sciences Research Center for the less developed regions director 袁钢明 in his blog says that comparing to the railway and transport big projects, people's livelihood as the breakthrough point to stimulate the economy will be more suitable for the current China's economic situation. He believes that the effect for the investments on railway and transport now will be greatly discounted. In contrast, the people's livelihood-related stuff such as welfare housing and rural roads buidup are the weak links in current government investments, such investments can be main points to increase domestic demand.
Monday, November 3, 2008
US may come out with 2nd round of financial rescue plans by this week
According to reports, if the US congressmen were to come back from Washington this week with the new US president's approval, US taxpayers or voters may by this week see the 2nd round financial rescue plans from the US government.
The last 168 billion worth of financial stimulus package was signed in February and the effect was not very prominent. The rescue plan this time if it were to come, the area of coverage may be wider and the 'strength' bigger.
The plan originally was estimated to need about 600 billion USD. It was later reduced down to 150 billion USD and later revised to about 300 billion USD, which is about 2% of US GDP. Although 300 billion USD is much lesser than the government's support for the finance department, but it is the largest sum in the recent economic stimulus packages.
The Wall Street Journal in US released a report on the 31 October 2008 mentioning that ending 2007, the top 9 banks that accepted the US government financial aids owed the senior management pension funds and deferred bonus payouts amounting to more than 40 billion USD. This means that part of the financial aid funds meant to help banks loosen the liquidity crisis may have ended up in the top management pockets.
The US House of Representatives Finance Committee Chairman Barney Frank says that funds meant to be used to save the market if used for other means, like for example paying Wall Street managers bonuses or pension funds will be a criminal act.
US Congress is now investigating the 9 banks top management year end bonus packages. The US government says that it is closely monitoring how the banks uses the financial aid funds and will make sure that they will not be mis-used.
The last 168 billion worth of financial stimulus package was signed in February and the effect was not very prominent. The rescue plan this time if it were to come, the area of coverage may be wider and the 'strength' bigger.
The plan originally was estimated to need about 600 billion USD. It was later reduced down to 150 billion USD and later revised to about 300 billion USD, which is about 2% of US GDP. Although 300 billion USD is much lesser than the government's support for the finance department, but it is the largest sum in the recent economic stimulus packages.
The Wall Street Journal in US released a report on the 31 October 2008 mentioning that ending 2007, the top 9 banks that accepted the US government financial aids owed the senior management pension funds and deferred bonus payouts amounting to more than 40 billion USD. This means that part of the financial aid funds meant to help banks loosen the liquidity crisis may have ended up in the top management pockets.
The US House of Representatives Finance Committee Chairman Barney Frank says that funds meant to be used to save the market if used for other means, like for example paying Wall Street managers bonuses or pension funds will be a criminal act.
US Congress is now investigating the 9 banks top management year end bonus packages. The US government says that it is closely monitoring how the banks uses the financial aid funds and will make sure that they will not be mis-used.
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