China’s government leaders say that any stimulus they might add to the economy in the People’s Republic will be nowhere close to the $600 billion invested in 2008. They claim that China does not face similar problems to the period four years ago when the world dropped into one of the deepest recessions in decades. At that point, China’s growth and employment where threatened. The amount of stimulus is likely to change no matter what government officials say.
China’s GDP growth rate is down near 8%. In most economies that would be a boom. In China’s, it could be near a recession. And, the slow growth may worsen as its major trading partner the EU, the largest region in the world by GDP, becomes more economically troubled and falls into a second recession. China’s middle class has become a larger part of GDP. This middle class has to grow and prosper to support GDP. If factory activity slows, and employment growth stagnates, the amount of stimulus forecast would have to rise quickly.
Douglas A. McIntyre