China Races to Boost Post-Olympics Economy

27 August 2008

BEIJING: As the last firework lit up the skies and the world's sporting heroes boarded their homeward flights, Beijing was already devoting much thought to China's post-Olympic economy.

The nation's policymakers are reportedly studying an economic stimulus plan worth up to 400 billion yuan ($58bn; €39.8bn; £31.6bn), to include increased spending on infrastructure as a way of reducing reliance on exports in a flagging world economy.

The government has already unveiled plans to increase payments to power companies, relax limits on bank lending and offer tax breaks to textile exporters.

China's economy, which boomed in the run-up to the hugely successful staging of the Olympic Games, is, nonetheless, feeling the effects of the global downturn as its trading partners cut back on orders.

GDP growth slowed to 10.1% in Q2 from an annual 11.9% in 2007. But the Chinese central bank expects GDP to maintain pace for the rest of 2008, a sixth straight year of double-digit growth.

Notes Arthur Kroeber of Dragonomics in Beijing: "We're going down from 'stupidly fast' last year to 'really fast' this year and just 'plain ordinary fast' next year, which would be in the 8% to 9% range.

"It's a big downshift, and that may create some problems, but they'll still be growing faster than any other major economy in the world."

Data sourced from International Herald-Tribune; additional content by WARC staff