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China Approves $586 Billion Stimulus Package

Written By David D'Angelo on Wednesday, November 12, 2008 | 11/12/2008

POLITICALLY WEDNESDAY: BEIJING—China announced a $586- billion stimulus package on Sunday in its biggest move to stop the global financial crisis from hitting the world’s fourth-largest economy. A statement on the government’s website said China’s Cabinet had approved a plan to invest 4 trillion yuan ($586 billion) in infrastructure and social welfare by the end of 2010.

China’s export-driven economy is starting to feel the impact of the economic slowdown in the United States and Europe, and the government has already cut key interest rates three times in less than two months in a bid to spur economic expansion.

The Chinese move came as business leaders attending a weekend forum in Dubai warned the world to brace for even more painful economic times ahead, but they said the victory of US President-elect Barack Obama offered hope for fresh leadership at a crucial time for the global economy.

In the United States, politicians and economists also agreed on the painful bottom line: It’s only going to get worse.

In Brazil, a gathering of central bank governors and finance ministers from the world’s leading economies, including emerging powers like China, tackled the threat of a global recession and forged a consensus on the need to take coordinated measures to stimulate growth.

The financial crisis that began with bad US home loans is now moving from the banking sector into wide swaths of the global economy—costing millions of jobs, forcing working families to cut back and driving once-mighty companies into bankruptcy.

The US government on Friday reported that the jobless ranks zoomed past 10 million last month, the most in a quarter-century, as factories shut down and offices laid off 240,000 more Americans with the holidays nearing. The US unemployment rate in October shot up to 6.5 percent, its highest level in 14 years.

Jobless rates are rising elsewhere too: The UN labor agency said last month that world unemployment would hit 210 million people by the end of next year, its highest rate in the past decade.

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