China Rolls Out Aggressive Economic Stimulus Plan

With less than two months left in the Bush Administration's tenure, China has made a bold economic move that many expect will set the bar for further--especially within the United States--global action.

According to the International Herald Tribune, the Chinese government announced Sunday a broad-reaching economic stimulus plan that will inject 586 billion in new capital into new infrastructure programs. According to the report, the funds will be used for new railways, airports, subways, and to rebuild and refurbish neighborhoods and buildings damaged in the May earthquake which rocked the Southern portion of the country.

This stimulus plan is the largest in scale ever undertaken by the Chinese government, a sign of the ever-increasing worries over the fate of the global financial system.

This plan precedes an economic summit between the United States and China, scheduled to take place in less than a week in Washington. It also comes on the heels of the G-20 summit held in Sao Paulo, Brazil. The stimulus plan is the first of its kind globally, and expects to lead the charge against a continued economic slide. Presidents Bush and Jintao are expected to discuss continued strategies to countering the destabilizing effect of frozen credit markets and failing economic institutions.

In the wake of the recent election, Chinese President Hu spoke with President-elect Obama on Saturday to discuss future initiatives, most especially concerning the global finance markets. The continued progress and cooperation between the United States and China will be especially imperative during and after the transition from a Bush to an Obama administration.

The Chinese plan, in contrast to previous and expected US-led initiatives, draws on funds from state-owned companies and state banks that are expected to respond to and benefit from the stimulus package with continued financial growth and expansion. Chinese growth over the past five years has been above 10 percent, and this rate of expansion is expected slow, but not diminish altogether.

More specifically, the plan includes programs to fund rural infrastructure, water and electricity programs, and technological innovation. This fresh injection of capital is scheduled to be implemented immediately, with projects to begin this year.

China, as with the rest of the global community, is suffering from the slowdown. Massive layoffs and a shrinking GDP have Chinese officials concerned. The stimulus plan hopes to reach into these struggling markets, increase growth and revenues, and continue to push technological advances.