Chinese authorities in infrastructure spending spree to stimulate economy.
China will spend 4 trillion yuan ($586 billion) over the next two years on infrastructure and social welfare projects, the country’s State Council announced on November 9. Policymakers hope that the spending spree will strengthen the domestic economy and reduce the economic drag from the financial crisis in the United States and other markets. The stimulus package will channel funds into 10 areas, including low-income housing, rural infrastructure, transportation, environmental protection and healthcare. To further boost the economy, the Chinese government has also increased export tax rebates, lowered interest rates and encouraged banks to be more proactive in their lending.
The government has also decided to give rural residents more freedom to use land by allowing them to lease or sell their land-use rights. In the past, land was collectively owned and contracted to farmers on long-term leases. In addition to providing more opportunities to make money from leasing or selling land-use rights, the new policy will provide more legal protection for rural residents in situations involving government land acquisitions. Many of China’s tens of thousands of rural protests each year stem from land disputes as the country’s sprawling urban areas seek out rural land for development.
While its leaders worked to compensate for a global slowdown, China’s economy proved remarkably resilient: Its trade surplus grew to a record high in October despite slowing export growth. According to China’s customs office, exports grew by 19.2% year-on-year in October, down from 21.5% in September and 25.6% for 2007. Import growth slowed even more drastically to 15.6% from 21.3% in September, causing the trade surplus to jump to a record $35.2 billion from $29.3 billion in September.
China’s insurance companies will soon be able to invest in non-listed companies, a spokesperson from the China Insurance Regulatory Commission announced in November. The new policy will widen investment options for the country’s insurance companies, which have had difficulties securing stable investment returns.