Launched in changsha city $130 billion stimulus plan
Changsha, central China’s a tough industrial city, introduced a scale of the us $130 billion investment plan. In China’s economic growth slowing, the plan for China’s other local governments may be introduced to pave the stimulus plan.
China’s central government has said it will never again release like 2009 to 2010 that the size of the economic stimulus. The economic stimulus caused the debt and inflation soaring consequences. But the central government has also started to call for increased investment, to support the economy, which is eager to growth of local government launched ambitious spending plan opened the gate.
Hunan changsha city is the first comprehensive spending plans announced the launch of the city. Analysts said the move clearly shows that China’s current top priority is for increasingly weak economic support. China’s economy grew 7.6% in the second quarter, is the lowest level in three years.
Red ear Securities (Mizuho Securities) economists ShenJianGuang said: “China’s prime minister wen jiabao recently proposed to promote the investment and increasing employment by changsha beginning, after the local governments in China could all come out with new fiscal stimulus plan.”
But some question the ability of the government to raise enough money in changsha city to complete the project. Some worry that, another round of spending heavily, may lead to investment appears waste, China’s long-term economic prospects for damage.
Barclays (Barclays) a health economics, said: “people are not just the government to stimulate the appropriate scale agree. Monetary and fiscal has some limitations, otherwise we should have seen more now this (investment plan come.”
The global economic crisis in 2008, China launched a round of stimulus plan debt drive. The plan China’s economy to achieve strong recovery, but also let banking bad loans back burden, and blow high real estate bubble.
The central government get the lesson, in the face of slowing economic growth this year became much more cautious. But the land transfer to turn cold and sharply reduced revenue effects of local government, to increase investment, and promote such a plan in seems to have won the political support.
Changsha, this city has a population of 7 million, and in 195 a project plan on investment of 829 billion yuan ($130 billion), the project scope covers airport expansion, road engineering, waste plant construction and city construction and other aspects.
The xinhua news agency quoted party secretary of changsha ChenRunEr words: “although changsha economic fundamentals are still very good, but we cannot ignore the pressure, and must encourage stability, healthy growth.”
In changsha city announced that its plans, the China’s state council passed a promote the rise of the central region of the opinion. The state council urged the local government to the development of the equipment manufacturing industry and high technology industries, and key investment airport and other infrastructure projects.
The government’s announcement in changsha, lack of some necessary data, so it is difficult for us to assess the potential impact. For example, changsha city government didn’t explain this round of investment will finish in long, also did not say how many projects are new project.
How will the government spending in changsha city for financing plan, this also is a wild card. The total expenditures in changsha city government plans to target is one of the city’s last year in GDP (GDP) of 1.47 times, more than 2008 China 4 trillion one 5 of the stimulus plan. However, when the 4 trillion is in China all over the country the sum total of the expenditure, and changsha is just a city.
ShenJianGuang said, local governments are often exaggerate their investment programs, and ultimately may be only the first plan outlays of a third.
Changsha city government says it will invite “international financial institutions” and their local Banks and investment together.
Nomura securities (Nomura) economists ZhangZhiWei said: “financing is a problem. The program is how much can the actual implementation, to a large extent depends on the bank loan.”
Because the last round of economic stimulus the accumulation of worry about debt, the bank in the past two years in fact cut off on the local government loans. But regulators in recent weeks began to relax controls, allow the bank to may bring good return programs for a loan.
Policy relax, the local government have launched large-scale investment plan.
Xian (China northern province of shaanxi provincial capital) city government said this week, may be in already into planning of article 6 outside subway lines, and article 9 subway construction. At the same time, China southern guizhou province in the government says, want to invest 3 trillion yuan or so, for the development of the tourism industry in the province.
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