China Expands Stealth Stimulus Package

This Bystander noted a couple of days back that there was a risk that the stimulus cash would run out before the underlying economy regained vigor–and that might mean the additional stimulus money Prime Minister Wen Jiabao says he has in his back pocket might be brought out. Now comes news, via Xinhua, that Beijing is expanding its subsidy program for the interior to the coastal cities.

The program applies to purchases of new cars and home appliances and is aimed at boosting domestic consumption, and by extension domestic employment. The target is to add 3m jobs in light engineering over the next three years. Beijing is allocating 5 billion yuan ($730 million) to the program for this year, up from the original 1 billion yuan, for the vehicles part, and 2 billion yuan for domestic appliances.

Stealth stimulus.

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