OPINION> Commentary
No game of numbers
(China Daily)
Updated: 2008-11-26 07:47

Those who have worried that the Chinese government's stimulus package may turn out to be much smaller than the headline figure of 4 trillion yuan ($586 billion) over two years can rest assured that local governments in this country will never let them down in terms of expanding investment.

Domestic reports had it that the stimulus plans of 24 provincial-level governments have already reached a total of about 18 trillion yuan ($2.64 trillion) over a period as long as up to five years.

Though it is difficult to figure out the exact amount of stimulus fund in each year, the sheer size of the aggregate planned investment speaks volumes for local governments' eagerness to spend.

The massive stimulus package China's central government announced early this month has been widely cheered at home and abroad for good reasons.

Domestically, it is believed that such a huge fiscal stimulus will effectively cushion the economy against the global financial crisis and economic downturn.

On the international front, China's efforts to stimulate domestic demand and thus import more raw materials and infrastructural-building machinery are certainly welcome. As long as China keeps its economic engine running, the world economy will suffer less from the recession of developed countries.

It is such high expectation on China's stimulus package that gives rise to worries about the actual sum of additional money the central government will spend. The central government has only begun to provide piecemeal details of when the money will be spent or how it will be divided.

However, local governments' 18-trillion-yuan investment plans have easily dwarfed the central government's two-year spending initiative.

Undoubtedly, local governments, especially those in central and western areas, are justified to increase spending on infrastructure projects such as railways, roads, airports and the power grid.

But a planned surge in infrastructure spending does not automatically guarantee improved conditions for economic growth in future. Local governments must do their most to ensure that these new projects are not only cost-efficient but also commensurate with the development level of local economies.

(China Daily 11/26/2008 page8)