2016-08-22

No Cure for What Ails Northeast

SCMP: China falls back on fiscal stimulus to revive growth in ailing northeast rust belt
China’s economic planner will roll out its Northeast Revitalisation Plan 2.0, a package of about 130 projects with total investment of 1.6 trillion yuan (HK$1.87 trillion), over the next three years to help the region, Chinese media reported earlier this week.

However, there are growing doubts over whether any government-led spending plan, in which some of the funds are expected to be paid by non-state investors, can be effective for a region plagued by commodity price drops, inefficient state businesses, rampant corruption and an exodus of young talent to other parts of China.
The combination of a commodities bust and then a real estate bust is too much for the region to recover from, at least when the government is propping up bankrupt enterprises.

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