Flash Comment
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China: Massive fiscal stimulus package announced
Mon, Nov 10 2008, 11:21 GMT
by Flemming J. Nielsen
On Sunday, the Chinese government announced a major new stimulus package estimated at CNY4 trillion (about USD570bn), to be spent over the next two years. The total size of the stimulus package is about 14.5% of GDP (based on 2008 estimates), or roughly 7% of GDP in spending per year.
The main elements in the stimulus package are:
- Construction of more affordable low-rent housing.
- Increasing investment in rural infrastructure (mainly road and power grids).
- Boosting investment in transportation (railway, airports and upgrade of urban power grids).
- Increase spending on healthcare and education.
- Improve environmental protection by investing in sewage, rubbish treatment and energy conser-vation.
- Extending reform in VAT reform to all industries (cut corporate taxation by CNY120bn).
- Income support by increasing agricultural subsidies and subsidies to low income urbane resi-dents.
Published on Mon, Nov 10 2008, 15:52 GMT
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