China Stimulus: Politically Inspired, W…

China may have played a major role in rescuing the global economy in the wake of the 2008 financial meltdown. But its latest stimulus policies seem more likely to aggravate its own problems and those of the world than to be a help. Premier Wen Jiabao acknowledges that the economy is slowing and needs stimulus but his preferred tools appear politically inspired and economically wrong-headed. He wants to stimulate investment and is calling on major state enterprises to help by investing in bigger and better plant and equipment. This, it is hoped, will plug the gap in investment left by the deflating of the housing bubble. Secondly he is hoping for exports to continue to be a positive factor with further gains in China’s share of global markets.

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