What's Next for China After Saving the World?
The giant fiscal stimulus and bank lending spree that China started two years ago saved the world from recession. What can Beijing do for a follow-up act?
Internationally, the success of the unprecedented pump-priming has accelerated a shift in economic influence that has put Beijing front and center of policy making, as the summit meeting of the Group of 20 major economies in Seoul is likely to show this week.
Domestically, the 4-trillion-renminbi, or $601 billion, package announced Nov. 9, 2008, put a floor under an economy that was in free fall during the global financial crisis. More than 20 million migrant workers who had lost their jobs were quickly absorbed as the government started public works projects.
Two years later, China can boast, among other things, the world’s biggest high-speed-rail network, which is doing wonders for the country’s reputation.
“China’s self-confidence got a big boost from the fiscal program, which goes beyond the immediate economic effects,” said Jonathan Fenby, head of China research at Trusted Sources, an emerging markets consulting firm.
Mr. Fenby said the tangible results of the splurge could only increase China’s pride in its ability to raise its game.
“One cannot help making comparisons with infrastructure in the U.S. and U.K.,” he said. “I am sure the Chinese do.”
Success, however, heightens expectations.
China, which now has the world’s second-largest economy, after that of the United States, is under pressure to shoulder more responsibility for tasks including curtailing carbon emissions and reducing global imbalances.
If the whole 'carbon credit' scam relies on China volunteering to tax themselves, then we can rest assure this idiocy will not pass.