Why Chinese Stimulus Program Is Working
China’s economic growth surged to 8.9% in the third quarter of 2009, returning China to 2007 when its economy was hot and heavy in import cash. Much of the growth is from its $586 billion stimulus program. So why is China’s stimulus working so well when the US stimulus hasn’t seemed to make a dent.
Stimulus Money Staying in China
The biggest benefit that China has with its stimulus package is that the money is staying in China. First, infrastructure investments are certain to remain in China as money is dispersed for steel, concrete and labor, all of which are sourced directly, not imported. After moving through those industries, the money continues throughout the economy.
Infrastructure Spending Is Investing
Rebuilding old infrastructure or putting new infrastructure into place is a long term investment. New rail lines will be used to ship goods produced in Chinese factories. Freshly paved roads will allow people and goods to travel further, faster and more efficiently, and also give way for a full-blown automotive industry. In fact, stimulus efforts pushed China into the number 1 slot for auto production and contributed heavily to the growth in the economy.
Consumption Is Growing
Consumption, though not particularly productive, does have its economic benefits. Chinese citizens are learning that they don’t have to produce but they can actually spend the fruits of their labor on things to better their lives. Mobile phones, personal modes of transportation and retail goods drove growth in the third quarter. Retail sales exploded by 15% in the first three quarters of the year, helping to stimulate the economy and invigorate production while exports remain weaker.
American Architect Writes Fun Book about Doing Business in China.
“The Tragic Kingdom, or; “Prisoner in a Chinese Theme Park”, (found on all bookstore websites such as amazon.com, borders, etc), is a behind-the-scenes look into the field of design and build in China. The book is a profile of the personalities, culture, and psychology of the world’s most massive looming superpower as seen through the eyes of an ex-pat American.
I have witnessed a formidable decade in which China has commanded a modern presence on the world stage and have participated in the planning, designing, and building of mega-theme parks in Beijing, world-class aquariums in Shanghai, gigantic malls in the Pearl Delta, resorts in Tibet, and panda relocation projects in the foothills of the Himalayas.
The stories and themes found in The Tragic Kingdom spring from one man’s journey. At the same time I believe they disclose truths about a globalization that eventually will impact every economy, lifestyle, and person on the planet.