There are rumors that China is strongly considering finally coming up with a large stimulus package. According to China economist Teeuwe Mevangen, this could amount to around 160 billion dollars and would mainly be invested in infrastructure.
More and more Chinese feel that their country is in economic trouble. There are even reports that some people who work for the government are not being paid their wages. Although economist Mevangen does not want to compare it with an American shutdown.
‘It is not the case that the national government has to stop activities. There are major differences between provinces’
“It is not the case that the national government has to stop activities,” he says. ‘There are major differences between provinces. Some are really overloaded with debts and provincial governments sometimes postpone salary payments to staff as a result. Fortunately, a number of other provinces do not have such problems.’
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Package of around 160 billion dollars
MeVisen sees signs that China is recognizing its economic problems and wants to tackle them. “There are rumors that China is strongly considering finally coming up with a large investment package of around $160 billion.” According to the economist, the expectation is that the money will largely be invested in infrastructure projects, such as water treatment plants and also in digital infrastructure.
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Stop pumping money into real estate
In the real estate sector, which is under enormous pressure, China will not invest the money, Mevangen believes. ‘It is important to create a foundation for this. But if you think that you can still achieve economic growth from investing in real estate, then you are wrong.’
According to him, that is exactly what went wrong. “25 percent of China’s recent growth has come from real estate, including housing construction and steel production. Beijing also understands that this is untenable.’