Posted on 02/02/2009 10:29:04 PM PST by TigerLikesRooster
China falls into budget deficit as spending balloons
China's attempts to spend its way out of economic depression led to a fiscal deficit of 111bn yuan (£12bn) last year.
By Malcolm Moore in Shanghai
Last Updated: 3:03PM GMT 02 Feb 2009
Despite a near 20pc rise in tax revenues and a record surplus of 1.19 trillion yuan (£128bn) in the first six months of the year, the dramatic scale of government spending in November and December was enough to plunge the entire year into deficit.
The figures are the first indication of how quickly and forcefully China reacted to the economic crisis after it announced a fiscal stimulus package of 4 trillion yuan in November to build new roads, railways, schools and hospitals.
Government spending in December surged to 1.66 trillion yuan, more than triple the previous month's total and 31pc higher compared to the same month last year.
The news came as Wen Jiabao, the Chinese prime minister, said that he was mulling over another fiscal stimulus package. "We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively, before an economic retreat," he told the Financial Times.
(Excerpt) Read more at telegraph.co.uk ...
Ping!
Take a little trip
Take a little trip
‘’’On the M/V Callapso
“There are already some signs that consumers are reacting positively to government propaganda urging them to open their wallets and “buy Chinese” in order to keep the economy going. Retail sales rose by almost 14pc during the Chinese New Year holidays, compared to last year”.
Bububutbut...that’s protectionist!!
trust me, china has no problem with debt.
all they have to do is unload US treasuries they hold
please give me a break
do you people understand that the media will play this tearing down the economy thing until about early 2011, just in time to start building it up again until the election in fall 2012.
hopefully china is the country that can pull us all out of this by opening her huge cache of US cash. please china spend spemd
Oh...but with the Free Traders....its OK for China to be protectionist....they have been doing that for years...
Who is going to buy those US Tresuries from them? Santa Claus? Raul Castro?
China is just as skewered as the US is....they hold debt that they cant sell, and pray the US can pay up...
China has a big problem because they relied on bad Free Trade deals, along with the US. They have little domestic spending....and prison labor just doesnt have that “consumer spending” they need.
building more aircraft carriers is a stimulus?
I want to get it over with. Just stop buying the treaury bonds, please.
If you love China so much, perhaps you should go live there...as a chinese citizen. China is not our savior and you’re smoking some serious crack if you buy into such a theory.
Are you freaking serious? You can’t be. Are you actually arguing that we need to enact and defend policies that allow us to continue, nay, that force us into borrowing money? worse yet, that allow Obama and his socialist welfare state perpetuating lackeys to continue borrowing money? Borrowing money in the first place is the slippery slope for Gods sakes. Sheesh.
If the Chinese CCP is smart, it will handover its trade surplus dollars and treasury paper to its people through cheques, open up its borders and then ask them to go and spend it wherever they want.
One way tickets for the “potential reactionaries” :-) so that they don’t come back to bring down what’s left of China.
Just not in the particular spot we want to be stimulated in... : (
My point is that China is holding our debt. Under Clinton the average maturity of out debt outstanding went from over ten years to around three years. Bush took it even shorter as short term rates were so much lower than long term rates. Problem is, short term rates are more interest volatile and can go up rapidly.
The problem is that most of the debt China owns is very short term. We rely on them to buy new issue so we can pay them on the older notes. If they stop purchasing the new treasury bills, we must still pay the old off. We would end up like Bernie Madoff when the demands for $$$ were greater than the new money invested.
There is absolutely no way this country can make it through this financial crunch without defaulting and reissuing new currency. Here come the Amero Dollar which will be exchanged for our current dollar.
And either a world war or the total collapse of the government. Not a nice picture either way.
I’ll take option B without too much remorse. Option A would be A-OK too under the right circumstances.
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