China entered the crisis in an entirely different position. It was running a budget surplus and had been raising interest rates to tamp down excessive growth. Its banks had been reining in consumer spending and excessive credit. So when the crisis hit, the Chinese government could adopt textbook policies to jump-start growth. It could lower interest rates, raise government spending, ease up on credit, and encourage consumers to start spending. Having been disciplined during the fat years, Beijing could now ease up during the lean ones.This to me is not a big deal. After all, the Chinese economy has a lot to catch up with the US. But, the following ought to make American politicians think twice about what they are up to, particularly the likes of those who want to yell "you lie!":
And look at the nature of China's stimulus. Most of U.S. government spending is directed at consumption—in the form of subsidies, wages, health benefits, etc. The bulk of China's stimulus is going toward investment for future growth: infrastructure and new technologies. Having built 21st-century infrastructure for its first-tier cities in the last decade, Beijing will now build similar facilities for the second tier.
China is also well aware of its dependence on imported oil and is acting in surprisingly farsighted ways. It now spends more on solar, wind, and battery technology than the United States does. Research by the investment bank Lazard Freres shows that of the top 10 companies (by market capitalization) in these three fields, four are Chinese. (Only three are American.)The only thing to watch out for, says this FT blog post:
Worries that China is in the grip of a real estate bubble intensified after a five-bedroom apartment in Hong Kong was sold for $56.6m this week. Andy Xie, a Shanghai based economist, argues that China is probably the most bubble-prone economy in modern times - and may be just ten years away from its final day of reckoning.