China's $586 billion plan – is it enough?
Posted: Monday, November 17, 2008 2:00 PM
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Beijing, China
By Adrienne Mong, NBC News Producer
BEIJING – As factories close up shop in the world’s largest manufacturing exporter, sending thousands of temporary, or migrant, workers without jobs onto the streets, the Chinese government faces potentially its biggest employment challenge in its thirty years of economic reform.
Two weekends ago, the State Council – or China’s cabinet – announced a massive economic stimulus plan, totaling $586 billion. Last Friday, details of the ten-point program finally emerged. Spending over two years will target rural and transport infrastructure, health, education, the environment, and helping to rebuild quake-devastated Sichuan Province.
News of the plan has been widely welcomed around the world and in China, renewing hopes that the country can help offset the global economic turmoil. One economist here even likened it – in tandem with other recent reform measures – to a "New Deal with Chinese characteristics."
But data continues to trickle in, revealing just how much the export slowdown has affected the Chinese economy overall. This weekend, a vice commerce minister said the country had experienced negative foreign direct investment growth last month, the first time for China. The official said Beijing would do more to create better conditions for multinational companies.
A labor economist who spoke to NBC News in Beijing, and who thinks the plan isn’t enough to stem the growing tide of unemployment, says the focus should be on small and medium-sized enterprises. These, says Professor Wang Yijiang at the Cheung Kong Graduate School of Business, are responsible for keeping 75 percent of China’s labor force employed.
