Business

China Said to Be Planning $315 Bil. Stimulus Package
By wchung | 08 Jun, 2026

China is preparing to pump 2 trillion yuan ($315 billion) into another economic stimulus packages, according to a Credit Suisse report. Beijing often uses outside media and financial firms to telegraph its policy initiatives. This report was published in the state-run business site China Economic Net.

The amount of the stimulus is meant to keep economic growth from dipping below the 8% level during the second half of 2012, and is about half the amount used to stimulate the economy in 2008 when the US and western Europe was hit by a financial crisis caused by the collapse of the overleveraged real estate market, said Credit Suisse analyst Tao Dong.

The stimulus “can hold the slide in growth and investment demand, but probably not enough to stage a 2009-style rebound,” Tao said.

Unlike the 2008 stimulus financed mostly by local governments borrowing from banks, this stimulus will be funded mostly by the central government.

Since November 2008, when Beijing announced China’s 4 trillion yuan ($630 bil.) stimulus package, local governments have borrowed an estimated 14 trillion yuan ($2.2 tril.). The excessive borrowing translated into high consumer inflation in 2010 and 2011 and put banks under the crushing burden of bad loans.

This year’s package is expected to boost subsidies for environmental-protection projects and funding for public housing as part of the central government’s plan to raise the people’s quality of life as well as living standards.

Last week China’s State Council had announced that the government would stimulate growth in the face of increasing economic headwinds caused mainly by shrinking demand from a crisis-hit Europe. The announcement gave no specifics but suggested it would include measures similar to those used in 2008 — faster approval of infrastructure projects, more subsidies for consumer goods sales, and encouragement to seek alternative financing.

But banks are unlikely to be as freewheeling in making loans as in 2008, said economists from Standard Chartered Bank in a report released yesterday.

“The ‘new’ idea in the 2012 package is more private-sector participation, though we are yet to be convinced that enough has been done to make that a reality,” said the report.

Opening lending to the private banking sector has been one of the proposals put forward by Wen Jiabao in his recent round of speeches urging more liberalization.