China just announced an Olympian contribution to the global economy: The Chinese government will spend $600 billion by the end of 2010 to help prop up the Chinese economy. As Premier Wen Jiabao sees it, not only will the staggeringly big outlay help China, it will prove, "our biggest contribution to the world."
With so much of the global economy, and so many multinational companies, selling to China's fast-growing pool of newly minted middle-class capitalists, China's $600 billion stimulus plan amounts to help for one of the world's fastest-growing consumer markets.
Is it enough to keep the world out of a worldwide recession? Of course it is not enough to keep the world out of a recession. American consumers spend far more than Chinese, and the entire global economy has been hurt because Americans have so dramatically cut back on spending. But if Chinese leaders keep China's economy growing anywhere near double digits, they will soften the blows of the global economic slowdown. Not bad for a country that barely had an economy just a generation ago.
China plans to spend the money building more highways, railroads and airports, as well as better water, electricity and power infrastructure in rural areas. In addition, it plans to spend billions on environmental cleanup, rebuilding after the Sichuan earthquake, and on low-income housing and tax reforms. The building projects mean more Chinese workers will be hired, pumping spending money into the Chinese economy.
But the effects will be felt further afield: Australian mining companies will sell more iron ore to China than otherwise as China consumes more steel. Brazil will sell more soybean to the Chinese. American and European companies will sell both consumer goods and the machinery and equipment that will help keep China's economy humming.
The goal, Premier Wen announced, was to prevent "economic ups and downs" and to promote "steady and relatively fast" growth. Citibank predicts the stimulus package will allow China to maintain growth of 8% to 9% during the global downturn.
Some of the $600 billion in Chinese spending was previously announced, but let's put it in perspective: The U.S. has just announced it will spend $700 billion to bail out its banks, leaning a spending ladder up so America's financial system can climb partly out of the hole it dug for itself. President-Elect Obama has said he supports spending $50 billion on infrastructure to help boost the U.S. economy a fraction of what China plans to spend. Wow.
The world blames Wall Street for the mistakes that triggered the current global slowdown. Next weekend, when the leaders of 20 big economies meet in Washington to discuss the Made-in-the-USA crisis, leaders from outside the U.S. will be making their voices heard. When China talks, it may be the first time that a developing country had so much to say and had the financial clout to demand its voice be heard.
Robyn Meredith is senior editor, Asia for Forbes magazine and the author of The Elephant and the Dragon: The Rise of India and China and What it Means for All of Us. She writes a weekly column for Forbes.com.
