China's Extraordinary Stimulus Package

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China has decided that what its economy needs is an extraordinary stimulus package. As its growth in gross domestic product drops toward what is likely to be 7% and its PMI data shows contraction within that sector, experts have questioned whether bank policy alone can right problems that are caused mostly by the wider economic world.

The National Development and Reform Commission reported that it will give financial support to dozens of infrastructure programs. While these will not make up for export shortfalls, they will improve spending within China, and that may make up for what is likely to be a pullback in consumer spending caused, ironically, by worry about the overall economy of the People's Republic.

According to CNBC, analysts project the estimated total of the actions will be more than 1 trillion yuan ($157 billion), or 2.1% of China's economy. And:

The plans to build highways, ports and airport runways are among the most ambitious in China this year and signal growing intent to bolster economic growth as the country approaches a once-a-decade leadership transition.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, China, Economy, Infrastructure
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