Coronavirus: will China opt for massive infrastructure spending spree to save its economy as it did in 2008?
- China implemented a 4 trillion yuan (US$572 billion) stimulus package in 2008 in an attempt to manage the global financial crisis
- The coronavirus outbreak is increasingly likely to deal a heavy blow to China’s economy, threatening President Xi Jinping’s plan for 2020
Speculation is mounting that China will turn to its old playbook for bolstering economic growth that is set to suffer amid the coronavirus outbreak with massive state-led capital spending led by infrastructure investment.
It is increasingly clear that the outbreak of the deadly virus will deal a heavy blow to the world’s second largest economy and threaten President Xi Jinping’s grand goal of building up a comprehensive well-off society by 2020.
At least seven of 31 Chinese provinces have published long lists of investment projects in the last two months, with a combined investment of around 25 trillion yuan (US$3,6 trillion), including 3.5 trillion yuan (US$500 billion) for 2020.
The most simple and effective way to offset the epidemic and economic downturn remains infrastructure construction. It can stabilise growth, employment, unleash growth potential and improve long-term competitiveness
“The most simple and effective way to offset the epidemic and economic downturn remains infrastructure construction. It can stabilise growth, employment, unleash growth potential and improve long-term competitiveness,” said Ren Zheping, the chief economist for China Evergrande, the country’s main property developer, who is a former researcher with the Development Research Centre of the State Council.