China Stimulus

Let me just further the idea that China is committed to supporting economic growth in 2009-2010. While 25-40% of the 4 trillion yuan stimulus package that was announced a few weeks ago will be “new,” the 10 trillion stimulus that has been announced by the provincial governments will more than compensate for the “shortfall” in Stimplan 1, as that required the provinces to pay for about 2.6 trillion of the plan. So, there is about 7.5 trillion yuan in Stimplan 2, of which, even if only 1/3 is new, makes up for the shortfall we all believed re Stimplan 1. The important thing to not forget is that (1) China is committed to grow its economy pretty quickly out of the recession, (2) virtually all is not export related and (3) there will be a lost of “waste,” even if that is still spending.