China's Fiscal and Monetary Policy
Article Summary
The article, published by The Business Times on 11 January 2010, reported that China’s government will continue to spend the full amount of its full stimulus in 2010 despite the fact that government has ordered banks to control lending and implemented monetary policy to prevent over investment earlier.
Introduction
Since the financial tsunami and the bankruptcy of Lehman’s Brother in September 2008, the world’s economy took a deep plunge and the Chinese economy is no exception. In the wake of the global financial crisis, The Economist (2008) reported that China’s real GDP growth slowed to 9 percent in the third quarter of 2008 and export growth slowed to 21.1%. It was, in fact, well below analyst expectations and recent rates of expansion. We shall examine the various fiscal and monetary policies undertaken by the Chinese government in this report.
Fiscal Policy
In third quarter of 2008, China’s government thereby implemented economic stimulus packages to boost domestic demand and eased tight monetary policy introduced in early 2008, according to Maidment, P., (2008). Four trillion yuan ($586 billion) will be spent on upgrading infrastructure, particularly roads, railways, airports and the power grid; on raising rural incomes via land reform; and on social welfare projects such as affordable housing and environmental protection.
As the article indicted, Chinese government has continued on its fiscal policy and plan to spend all it stimulus funds in 2010, through higher spending on public works and aid, mostly went to state-owned construction companies and suppliers of steel and cement to build airports and other public facilities. This is mainly because of Premier Wen Jiabao and other officials reckon that recovery has not firmly established and are cautious against complacency.
China’s GDP in 2009
While most of the country in the world are seeing real GDP growth in red in 2009, like Singapore real GDP growth rate is -1.3%, China posted a real
The article, published by The Business Times on 11 January 2010, reported that China’s government will continue to spend the full amount of its full stimulus in 2010 despite the fact that government has ordered banks to control lending and implemented monetary policy to prevent over investment earlier.
Introduction
Since the financial tsunami and the bankruptcy of Lehman’s Brother in September 2008, the world’s economy took a deep plunge and the Chinese economy is no exception. In the wake of the global financial crisis, The Economist (2008) reported that China’s real GDP growth slowed to 9 percent in the third quarter of 2008 and export growth slowed to 21.1%. It was, in fact, well below analyst expectations and recent rates of expansion. We shall examine the various fiscal and monetary policies undertaken by the Chinese government in this report.
Fiscal Policy
In third quarter of 2008, China’s government thereby implemented economic stimulus packages to boost domestic demand and eased tight monetary policy introduced in early 2008, according to Maidment, P., (2008). Four trillion yuan ($586 billion) will be spent on upgrading infrastructure, particularly roads, railways, airports and the power grid; on raising rural incomes via land reform; and on social welfare projects such as affordable housing and environmental protection.
As the article indicted, Chinese government has continued on its fiscal policy and plan to spend all it stimulus funds in 2010, through higher spending on public works and aid, mostly went to state-owned construction companies and suppliers of steel and cement to build airports and other public facilities. This is mainly because of Premier Wen Jiabao and other officials reckon that recovery has not firmly established and are cautious against complacency.
China’s GDP in 2009
While most of the country in the world are seeing real GDP growth in red in 2009, like Singapore real GDP growth rate is -1.3%, China posted a real
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