China’s government announced a two-year stimulus exceeding a half-trillion dollars to offset the impact of slowing global growth and unlock the spending power of its vast population.
Premier Wen Jiabao’s cabinet set plans for 4 trillion yuan, or $586 billion, in spending and stimulus measures through the end of 2010 aimed specifically to target people’s livelihood, the official Xinhua News Agency said Sunday night.
It was unclear how much the plan, which will target 10 areas from rural infrastructure to low-cost housing, represents new spending and how quickly it can stimulate domestic demand.
The question is, will they fund this by selling treasuries? Or will they soak up money that would have otherwise gone to private capital investment.