The unstimulating Chinese stimulus plan

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The Chinese government’s big announcement that it would spend $586 billion stimulating its domestic economy by building highways, railroads and airports excited global markets for about half a day Monday. Then everybody remembered that, as the WSJ reports:

Already, according to official estimates, infrastructure spending had been increasing by an average of 20% annually for the past 30 years …

In other words: The Chinese are going to increase infrastructure spending. Tell me something I didn’t already know.

Then again, roads and bridges aren’t all that’s in the Chinese plan. As TIME’s Simon Elegant reports from Beijing:

[T]he government not only aims to boost its spending on infrastructure and projects but also seeks to get notoriously savings-obsessed Chinese consumers — who boast the highest household-savings rate in the world — to do more spending of their own. The package proposes to do this by, among other things, cutting taxes and abolishing existing limits on commercial banks’ credit-lending.

Hmmm, we’ll see if that actually happens, investors around the world seem to be saying. It would be great if it did. The U.S., after decades of debt-fueled consumer excess, now seems to be moving in China’s direction: More household saving, more infrastructure spending, more exports, more government involvement in the financial system and the economy as a whole. To keep this long-needed shift from devastating the global economy, China and its neighbors need to move in the direction of the U.S.: more borrowing, more consumer spending, more imports, less government involvement in the financial system and the economy as a whole.

And no, I didn’t just make up that argument. I stole it from Martin Wolf.