Investing Blog

Stimulus packages around the world are slowly appearing. Just yesterday China announced that it would create its own $586 Billion economic stimulus package to make up for the zero export growth it expects in the upcoming year. The Chinese economy is centered around the growth of exports to developed nations.

Unlike the stimulus packages in the United States, the Chinese package will be used to rebuild infrastructure from its roadways to airports and tax deductions for exporters to make up for slowing sales. Aid will also be given to the poorer citizens of China, mainly farmers who are hard hit by falling commodity prices. Education spending is likely to grow as well, making a direct investment on the future of China and its citizens.

All in all I’d say that China has done very well with this stimulus package and it is something that the US government should consider. Rather than dropping $600 checks in the hands of citizens, an investment in infrastructure and education will go directly to companies that will build the roads and schools that will educate the masses. Studies in the United States following the $155 Billion stimulus package found that very little of the money was actually spent and most was used to pay down debts and make necessary payments. A true stimulus is one that flows throughout the economy, an investment in infrastructure goes to the companies that do the work, to the suppliers of the raw materials and the people who work for each company.

The trickle down of stimulus is one of the best, in that all of the $586 Billion will work its way into the economy through wages, materials, and private corporations. This economic stimulus package ultimately serves two purposes to stimulate the economy and bring China up with the rest of the world with its infrastructure. The developed nations of the world should consider China’s plan.

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