China is contemplating an increase in infrastructure spending that would equal $730 billion over the next three to five years. The massive spending on tangible projects is in sharp contrast to the similar dollar figure being spent to bail out financial institutions here in the U.S.
The Chinese goverment aims to have 95 perecent of all towns and 80 percent of all villages linked to a national road network by the end of 2020. This additional spending is being considered in order to increase domestic demand and to stimulate local economies.
China undertook a similar strategy during the Asian financial crisis of 1998 in order to counter a regional growth slump. While China acts, the United States is formulating a similar plan to be enacted by the country’s next president.
{ 1 comment… read it below or add one }
I sure hope they have enough left over to keep buying US Treasury securities.