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China: Massive fiscal stimulus package announced

Mon, Nov 10 2008, 11:21 GMT
by Flemming J. Nielsen

Danske Bank A/S


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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http://www.danskebank.com/ | danskeresearch@danskebank.com

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