<nettime> Keynesianism is IN

[brian <brian.holmes@wanadoo.fr>]

In case you were wondering, here is a fairly convincing sign: it looks 
like Keynesian spending is IN. Could it be that those who build the best 
infrastructure over the next 3-5 years will be in the best position over 
the next fifteen or twenty? But what is the meaning of "best" in this 
case? Is it a matter of upping the capitalist ante another notch toward 
the total competition of all against all? Or will the "best" 
infrastructure prove to be the kind that most helps the citizens to live 
with each other and on the fragile earth? So many questions! Anyway, 
have a nice recession, it's gonna be a lot more interesting than what 
the stock market calls paradise - BH

***

NYT, November 10, 2008
China Unveils $586 Billion Economic Stimulus Plan
By DAVID BARBOZA

SHANGHAI -- China on Sunday announced a huge economic stimulus package 
aimed at bolstering its weakening economy and perhaps helping fight the 
effects of a global economic slowdown.

In a sweeping move at a time when major projects are being put off 
around the world, Beijing said it would spend an estimated $586 billion 
by 2010 on wide array of national infrastructure and social welfare 
projects, including constructing new railways, subways, airports and 
rebuilding communities devastated by an earthquake in southwest China in 
May.

The package, announced by the State Council Sunday evening, is the 
largest economic stimulus effort ever undertaken by the Chinese 
government and would amount to about 7 percent of the country's gross 
domestic product during each of the next two years.

Beijing also said it was loosening credit and encouraging lending as 
part of a more "pro-active fiscal policy."

"Over the past two months, the global financial crisis has been 
intensifying daily," the State Council said in its statement. "In 
expanding investment, we must be fast and heavy-handed."

The stimulus plan would be enormous for any country, let alone one whose 
gross domestic product is lower than most other major industrialized 
countries, at around $3.5 trillion this year. Earlier this year, the 
United States Congress passed a $700 billion bailout package in a 
country with an economy whose size is close to $14 trillion.

The announcement came less than a week before President Hu Jintao is 
scheduled to travel to Washington for a global economic summit meeting 
that will be attended by world leaders and hosted by President Bush. 
There, China is expected to be pressed by world leaders to do its part 
to help strengthen the global economy in the face of what some 
economists say is the worst financial crisis since the Great Depression.

But Beijing has already indicated that it intends to help stabilize the 
global economy by looking inward, and helping keep the world¡¯s 
fastest-growing economy on track.

At a weekend meeting of Group of 20 finance ministers in Sao Paolo, 
Brazil, the head of China's Central Bank, Zhou Xiaochuan, said China can 
help stabilize international markets by encouraging consumption at home.

And on Saturday, Chinese President Hu spoke by telephone with 
President-elect Barack Obama about a range of issues, including the 
global financial crisis and how the two countries might cooperate to 
help resolve economic problems, according to China's state-run news media.

Beijing is already struggling to cope with a rapidly slowing economy at 
home.

After five years of growth in excess of 10 percent, China's economy is 
beginning to weaken because of slowing export and investment growth, 
waning consumer confidence and severely depressed stock and property 
markets.

The downturn in investment and exports has led to factory closures in 
southern China, triggering mass layoffs and even sporadic protests by 
workers who have complained that owners disappeared without paying them 
their wages.

With many economists in China now projecting that growth in the fourth 
quarter of this year could be as low as 5.8 percent, and worries that 
China's economic miracle could be walloped by the global financial 
crisis, Beijing is moving aggressively.

While it is unclear how much of the stimulus money is additional 
government spending, on top of what the government normally earmarks for 
its infrastructure projects, the government made clear it was aimed at 
propelling growth for the next two and a quarter years.

Analysts were expecting China to announce a big stimulus package but say 
they were surprised at the size of it.

"That is much more aggressive than I expected," said Frank Gong, a Hong 
Kong based economist at J.P. Morgan. "That's a lot of money to spend."

Mr. Gong said that after the Asian financial crisis in 1997, Beijing 
undertook a similar, but much smaller, stimulus package, earmarking huge 
sums to build the country's massive highway and toll road system, which 
helped keep the economy growing.

Arthur Kroeber, managing director at Dragonomics, a Beijing-based 
economic research firm, said the government is concerned because people 
in China have suddenly pulled back on spending as a precautionary move 
because of worries about China suffering with the global economy.

"The government is sending a signal saying: 'We're going to spend in a 
big way,' " Mr. Kroeber said late Sunday in a telephone interview. "This 
is designed to say to the market that people should not panic."


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