Wearing a wrenching slowdown in the world’s second-largest economy, Beijing has again reached into its box of tricks, searching for a bit of magic. Alas, all it seems to have found is the same dusty old plan it concocted four years ago: a budget-busting stimulus package designed to boost a flagging economy artificially buttressed by cheap credit and industrial overcapacity.
Unlike Beijing’s first, initially lauded, shot at pump-priming in December 2008, which diverted $600 billion from state banks into new high-speed rail lines and highways, the second has attracted a mix of bafflement and derision.
In late August, province-level Chinese Communist Party officials lined up to announce their own spending sprees. Tianjin, a big city in the northeast, broke first, issuing plans to pump Rmb1.5 trillion ($240 billion) into everything from aerospace equipment to electric cars. Chongqing in the southwest, a big municipality governed until recently by the disgraced Bo Xilai, vowed to boost investment in local telecoms and auto firms by the same amount.
And still they came: Guangdong, Guizhou, Shanxi and Heilongjiang provinces, plus the cities of Ningbo, Nanjing and Changsha, each pledging to pump between Rmb800 billion and Rmb3 trillion into pet projects and companies.
