China's GDP surge - why is their stimulus package working?

Updated

China, the world's third largest economy, has recorded a better-than-expected second-quarter GDP growth of 7.9 percent. The acceleration in economic activity was fueled by a 4 trillion yuan ($586 billion) stimulus package that encouraged investment. Chinese officials now expect to easily achieve the 8 percent goal for growth this year.

Given China's GDP growth of 6.1 percent in the first quarter, several economists peg the country's annualized growth rate at over 15 percent, with Goldman Sachs analysts calling for a 16.5 percent rate. China's stimulus plan was announced about the same time as that in the U.S., so why is it working so much better?

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