China Announces A $586 Billion Stimulus

The size and scope of our next stimulus are still getting worked out, but China is taking action. The government just announced a massive $586 billion stimulus plan, with the money going to all the good stuff, like infrastructure, housing and grain subsidies.

Bloomberg: The funds, equivalent to almost a fifth of China’s $3.3 trillion gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said today on its Web site. China will adopt a “pro-active fiscal policy” and pursue a “moderately loose” monetary policy, it said.

“We have long-awaited this stimulus plan,” said Ken Peng, an economist at Citigroup Inc. in Shanghai. “The measures may stimulate domestic demand, but they won’t prevent China’s economy from slowing further as the global economy is certainly in a recession.”

$586 billion sounds like a lot, but when you describe it as a fifth of the GDP then it sounds huge. It kind of puts the $60 billion being talked about here into perspective.

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