(John Ransom, Headline USA) After imposing a zero tolerance policy for COVID with draconian lockdowns, Communist Party Secretary Xi Jinping, has called for unprecedented infrastructure spending to save the economy that he’s nearly ruined.
“The [Tuesday’s] meeting suggests to us that Chinese policymakers have been increasingly aware of the strong growth headwinds from Covid restrictions and continued property downturn, and [are] thus becoming more determined to ramp up policy easing measures,” Goldman Sachs analysts wrote on Wednesday, according to CNN.
Previously, China was on an austerity kick, raising interest rates in order to cool down a hot real estate market that was seeing prices grow to levels unaffordable for ordinary Chinese.
“Houses are built to be inhabited, not for speculation,” Xi said, according to Bloomberg News, as China dealt with perhaps the largest real estate property bubble in the world history.
Renminbi on course for steepest monthly fall as China’s economy slows
Currency sell-off sharpens after Xi Jinping pledges ‘all out’ infrastructure spendinghttps://t.co/KbN61Txa0o
— Gunther Schnabl (@GuntherSchnabl) April 29, 2022
What rising interest rates didn’t do, however, in cooling down the Chinese property market, COVID may have finally accomplished, as Xi’s public call for further infrastructure spending sounds to Chinese ears like a fire company putting out additional alarms.
Previously, Chinese infrastructure spending for 2022 amounted to $2.3 trillion, reported Bloomberg. And it’s unclear how big of an increase Xi is looking for in a bid to save the economy, according to CNN.
While the $2.3 trillion figure is impressive, it has to be understood against a population of 1.4 billion people, and a country that largely remains rural agricultural, outside of the big cities.
Per capita, it’s about half what Joe Biden and the Democrats just passed for America which has simply fueled inflation and not sparked any economic recovery.
The biggest policy changes that party leaders could make for the benefit of the Chinese people would be to drop their zero-tolerance COVID policies that have seen cities with populations of over 20 million lockdown for weeks at a time, and work against any artificial stimulus that the Chinese government might add to the economy.
“Speeding up construction may also be difficult to accomplish as the government doubles down on its zero-COVID approach, as it has already locked down Shanghai,” said the Australian Financial Review.
“There are fears of a similar shutdown in Beijing as the city undertakes mass testing of its 22 million people,” AFR added.
