China’s newly announced fiscal stimulus package may be smaller than it initially appeared, the Financial Times reported, citing analysts. The plan, to spend a purported US$586 billion over the next two years on projects in 10 target areas including roads and education, had strong positive effects on world stock markets after it was announced, but few details were disclosed. One concern is that much of the amount in the plan comprises money already allocated to projects in roads, rail, health, education and rural areas rather than new, previously unannounced funds. Arthur Kroeber of the research firm Dragonomics in Beijing estimated actual extra investment in the package at as little as US$191 billion, a third of the official number and equivalent to about 2% of China’s GDP each year. The package was unveiled ahead of the G-20 summit on global financial reform, which President Hu Jintao will attend in Washington at the end of this week.
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