China: Worry on the striking, 4-trillion stimulus plan

Global economy is stumbling, and neither can China stay out of the trouble. On 9, Nov, a striking stimulus plan, totally of 4 trillion yuan, was announced to public by the central government. Stock market was encouraged, so was the confidence of global market as it signals China’s pledge to pitch in the effort to solve the financial crisis.

However, the worry of public didn’t fade away, but only turned to new concerns: first, would the immense plan simply mean a big meal for corruption; second, would the over-heated constructions lead to more shoddy works, as that exposed by the subway tunnel tragedy happened last month in Hangzhou?

A massive infrastructure spending program has been pushed forward. The stimulus package is estimated to reach at 4 trillion yuan (about 570 billion U.S. dollars), which will be spent in the next two years to offset the gloomy global economic condition.

This is just the plan proposed by the central government. Shortly after it was revealed, local governments all over China followed closely to open their own plans that totally amount to 18 trillion yuan. A wave of heated construction is expected to flood across the country.

In the agenda of central government, the 4 trillion is going to be spent on 10 categories, among them welfare investment such as housing for low-income, health-care system and education, also infrastructure-building such as new railways, roads and airports. Specially, aid to post-earthquake reconstruction in Si-chuan is mentioned in the agenda. Equally notable is the subsidy for farmers and an explicit announcement to increase the price of state food purchase from farmers.

Of only the fourth-season budget of 2008, as much as 100 billion has been allocated to different national departments and agencies. Among them, the department for transport further proposed a 5-trillion spending in the next 5 years.

The scale of the construction is unprecedented. And from the day it was pushed forward, a race has kicked off.

Journalists have reported that delegates from nearly all provinces and every department have rushed to the office of National Development and Reform Commission (NDRC) to apply for funding, so that they can grab a piece of the huge cake.


On the afternoon of 118, Nov, at the office of NDRC, cars from Jiangsu, Shandong, Hebei and so on were parked along the road. The guards and cleaners proved that, non-local cars surged to the office ceaselessly in these days, and the information room is always crowded.

The NDRC, along with its provincial branches, is the central agency charged to make finance plan and allocate funding. It is now one of the hottest places.


We know each other (the people coming to the office for funding) for long time. There are here not only people from provincial NDRD, but also deputies from many departments and bureaus.” An official from Henan province told anonymously. Besides, people from department of finance and other provinces were found there.

The race is speeding up. But blogger worry the fund will be spent as quickly as they were obtained but far more irresponsibly.

Plain-clothed-prince said:


The lately news says 11 central departments have raced to snatch the 100-billion funding. Since the State Council requires that the stimulus plan should be carried out quickly, precisely and forcefully, there is nothing wrong to implement the policy actively. But never, never waste immense social resources only to boast short-term GDP.

praised the tax-cut:


The 120-billion cut of value-added tax to encourage the tech reform of enterprises bring people hope and comfort.

But given the tunnel collapse in Hangzhou, bloggers warned that a controlled spending is even more important.

First, reporter Yang-chuanmin 杨传敏 told how the transport construction is crazily speeding up:

杭州地铁湘湖站原本预计三年的工期,缩短为不到两年。因工期短,施工方为了赶工期,很多细节没做到位。在5层楼高的应力挤压下,支撑钢筋捆不住围绕基坑的连续墙,逐渐变形,终于在15日下午,其中的一堵被扭转成一个巨大的S 形。

The Hangzhou subway station is planned to be finished in three years, but was then shortened to 2 years. In order to catch up, the constructors failed to take care of many detailed works. Under the strong pressure as powerful as that of a 5-story building, the supporting rods can’t hold out any more and finally twisted into S shape on 15th.

One of the Hangzhou subway stations was completed 11 months earlier than planned. A security report in July indicates: “From January to June, 128 safety problems have been detected.”

Therefore, blogger zhangranbaodao said:


The collapse is the loudest yell against the Great Leap on investment! Obviously, impulsed by “sense of duty” and pressure, people are now just considering to finish the subway construction as soon as possible. In fact, it used to be that the subordinates were hasty than their bosses. Now, as the fire has been set, it becomes that both the superior officials and the sub-ordinates turned impatient.

Though the plan of central government is already more than striking, the local governments leap even further. Its investment amounts to 18 trillion.

Among them, Yunnan province, neighboring Burma, proposed a significant 3 trillion investment plan. It includes the China-Burma oil pipe and some railways. Guangdong, fell behind a little with 2.3 trillion.

The funding for investment, according to experts, will mainly come from bank loans. Also, a large part will have to come from private sector, because the governments can by no means to afford so large a spending.

But bloggers express theirworry.

A columnist in Yan-zhao Metropolitan Daily says in his essay <4万亿 10万亿 18万亿 投资为何变竞赛> 4 trillion, 10 trillion, 18 trillion, why the investment turn into a race:


I think, one of the reasons why the 18-trillion investment has much bubble is that many local governments have actually no affluent treasury. ……Scholars estimated that the direct government liability is up to 2 trillion. With so much debt, in addition to the uncertainty of future income, it is an X that how the 18 trillion can be guaranteed. Even though banks are able to lend, dare them fully meet the governments’ demand? And how can they pay the debt in the future?

Also, writer Niu-dao 牛刀 said in his article 18-trillion investment is great sweet-talk《地方政府18万亿投资是个超级大忽悠》


The risk to print more money is obvious, for that the inflation will be uncontrolled.

Additionally, Ye Tan pointed out in the article, Local governments need no 10-trillion investment, letting alone the 18 trillion 《地方政府投资无需10万亿更无需18万亿》that 4 problems will be troubling:


The former experience shows that 1/4 projects were not completed in time; nearly 40% projects don’t run well; some has significant problems on their quality; waste and embezzlement are of great damage.

While the most straightforward criticism comes from the scholar, professor Xu-zidong , who in a TV talk program relentlessly impugned that half the 4 trillion will be used for CORRUPTION. The program was scheduled to be rebroadcasted at 6:30 next morning. But audience found it replaced. Is it simply a pointless talk, or too honest to be tolerated?


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