China’s Stimulus Package: What are the Effects?

Brian W. Sloboda

Abstract


Many questions surround the stimulus package that was passed in early November 2008 by the Chinese government and the value of this stimulus package is worth four trillion yuan ($586 billion) over two years.  This stimulus package is equivalent to about 16% of China's annual GDP and this stimulus package is new spending, which was not part of its economic plan.  The intention of this stimulus package is to fund an array of infrastructure projects such as railways, highways, urban transit systems and other infrastructure projects.  However, many economists have claimed that the stimulus package is not as significant as it seems and some of the funds from this stimulus package has already been implemented before the announcement of this stimulus package. According to Sherman Chan, a Sydney-based economist with Moody's, the real size of the package may not be as large as the government has described.

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