China Joins The Bailout Bonanza
Nov 10th, 2008 | By Irwin Greenstein | Category: Emerging MarketsWhile the Bush administration clings to trickle-down economics, the Chinese government has embarked on an aggressive ground-up program – creating tens of thousands of jobs, to stimulate its economy.
China will spend an estimated $586 billion over the next two years on infrastructure projects. While this will reduce the growing unemployment crisis in China, it may not be enough to for a sustained recovery of the country’s stock markets.
Once again, China trumps the U.S. in long-term fixes.
While Obama talks about creating jobs through financial incentives for green industries, China is getting back to basics. It will spend about 7% of its GDP each year to build new roads, railways, airports and low-cost housing.
The $586-billion allocation includes some previously announced projects, but in the grand scheme of things it’s a hefty move by any measure.
Beijing said it’s the largest economic stimulus package ever by the Chinese government. Notice the term “economic stimulus” versus “bailout” and investors can see where to go long with their money.
China’s exports, the backbone of its economy, are way down as consumers around the world resist Chinese products. As a result, unemployment is way up – a concept virtually unthinkable as early as the beginning of this year.
After all, China has seen a five-year growth spurt in excess of 10%. Current predictions call for growth this year to approach 6%, with next year’s growth pegged at 5-6%.
It’s currently too soon to tell how quickly China’s stimulus package will be felt in terms of economic impact.
After all, China’s infrastructure budgets have already been growing approximately 20% annually over the past 20 years or so. Given the downturn in China’s economy, this newest infrastructure program could turn into a zero-sum strategy.
But even if that’s true, China will have a state-of-the-art transportation network to make it more competitive with the eventual rebound of the global economy.
By contrast, we will have wind turbines and compost heaps as the next administration moves into the White House.
Advertisement
Marion from Surrey, British Columbia said “Since I have joined MarketClub I have made $7,000.” Darrin from Minnesota made 159% on his first trade.
Countless other members over 40 countries tell the same story. Their success was thanks to a powerful, simple-to-use investment tool named MarketClub.
With MarketClub you receive access to…
* A proprietary scanning tool that identifies charting patterns primed for large moves.
* The customizable News Scan that lets you set up a scan to find stories on only the markets that you want to know about.
* The Trader's Blog which lets you share ideas with fellow traders along with the MarketClub team. We’ll answer your questions, post tips, share trading ideas, and post online market analysis videos based around MarketClub's methodology and tools.
And much, much more.
The best part is that right now, you can try MarketClub RISK FREE for 2 full months.