Publication:
Demystifying China’s Fiscal Stimulus

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dc.contributor.authorFardoust, Shahrokh
dc.contributor.authorLin, Justin Yifu
dc.contributor.authorLuo, Xubei
dc.date.accessioned2013-01-03T18:18:51Z
dc.date.available2013-01-03T18:18:51Z
dc.date.issued2012-10
dc.description.abstractChina's government economic stimulus package in 2008-09 appears to have worked well. It seems to have been about the right size, included a number of appropriate components, and was well timed. Its subnational component was designed to maximize the impact of the stimulus package on the economy and minimize the potential procyclical elements that are usually built into subnational fiscal mechanisms in federal countries. Moreover, China's massive fiscal stimulus played an important role in the overall recovery of the global economy. Using a simple analytical framework, this paper focuses on two key factors behind the success of the stimulus: investments in bottleneck-easing infrastructure projects and countercyclical nature of subnational spending based on the assumption that well-chosen infrastructure projects could improve business climate and thereby crowd in the private investment. The paper concludes that the expansionary subnational government spending played a key role in strengthening the overall impact of the stimulus and sustaining growth. It also highlights the importance of public investment quality and cautions about the sustainability of local government financing through the domestic banking system and increases in local governments off balance sheet or contingent liabilities. These lessons may be of particular relevance today for China, as well as other countries, in formulating policy response to another global economic slowdown or crisis, possibly as a result of the Eurozone turmoil. For China, investing in urban infrastructure and green economy, as well as in higher quality and better targeted social services, will be crucial for improving income inequality and inducing a more inclusive growth path.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/10/16816609/demystifying-chinas-fiscal-stimulus
dc.identifier.doi10.1596/1813-9450-6221
dc.identifier.urihttps://hdl.handle.net/10986/12066
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAGGREGATE EXPENDITURE
dc.subjectAUCTION
dc.subjectBACKED BONDS
dc.subjectBALANCE SHEET
dc.subjectBANK BORROWING
dc.subjectBANK LENDING
dc.subjectBANK LOANS
dc.subjectBANK POLICY
dc.subjectBANKING SECTOR
dc.subjectBANKING SYSTEM
dc.subjectBINDING CONSTRAINT
dc.subjectBONDS
dc.subjectBUDGET SURPLUS
dc.subjectBUDGETARY EXPENDITURES
dc.subjectBUSINESS CYCLE
dc.subjectCAPITAL FLOWS
dc.subjectCENTRAL AUTHORITIES
dc.subjectCENTRAL GOVERNMENT
dc.subjectCENTRAL GOVERNMENT GUARANTEE
dc.subjectCENTRAL GOVERNMENT REVENUES
dc.subjectCENTRAL GOVERNMENT SPENDING
dc.subjectCITIES
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMERCIAL LOANS
dc.subjectCOMPARATIVE ADVANTAGES
dc.subjectCONSUMPTION EXPENDITURE
dc.subjectCONSUMPTION SMOOTHING
dc.subjectCONTINGENT LIABILITIES
dc.subjectCORPORATE DEBT
dc.subjectCORPORATE INVESTMENT
dc.subjectCORPORATE SAVING
dc.subjectCREDIT MARKETS
dc.subjectCREDITORS
dc.subjectCURRENCY
dc.subjectCURRENT ACCOUNT SURPLUS
dc.subjectDEBT CRISIS
dc.subjectDEBT LEVEL
dc.subjectDEBT RATIO
dc.subjectDEBT SERVICE
dc.subjectDEBTS
dc.subjectDEFICITS
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPING COUNTRY
dc.subjectDEVELOPMENT BANK
dc.subjectDOMESTIC BANK
dc.subjectDOMESTIC BANKING
dc.subjectEMERGING ECONOMIES
dc.subjectEMERGING MARKETS
dc.subjectEMPLOYMENT
dc.subjectEQUIPMENT
dc.subjectEXPANSIONARY FISCAL POLICY
dc.subjectEXPENDITURE
dc.subjectEXPORTERS
dc.subjectEXTERNAL DEBT
dc.subjectFEDERAL COUNTRIES
dc.subjectFEDERAL COUNTRY
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFEDERAL TRANSFERS
dc.subjectFINANCES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL RESOURCES
dc.subjectFISCAL BALANCE
dc.subjectFISCAL CAPACITY
dc.subjectFISCAL DECENTRALIZATION
dc.subjectFISCAL DEFICIT
dc.subjectFISCAL FEDERALISM
dc.subjectFISCAL INSTITUTIONS
dc.subjectFISCAL MANAGEMENT
dc.subjectFISCAL PERFORMANCE
dc.subjectFISCAL POLICIES
dc.subjectFISCAL POLICY
dc.subjectFISCAL SPACE
dc.subjectFISCAL SUSTAINABILITY
dc.subjectFISCAL TRANSFERS
dc.subjectFIXED ASSETS
dc.subjectFIXED INVESTMENT
dc.subjectFOREIGN DIRECT INVESTMENT
dc.subjectFOREIGN EXCHANGE
dc.subjectFOREIGN EXCHANGE RESERVES
dc.subjectFOREIGN MARKETS
dc.subjectGLOBAL ECONOMY
dc.subjectGOVERNMENT BORROWING
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT EXPENDITURES
dc.subjectGOVERNMENT FINANCE
dc.subjectGOVERNMENT FINANCES
dc.subjectGOVERNMENT FINANCING
dc.subjectGOVERNMENT INTERVENTION
dc.subjectGOVERNMENT INVESTMENT
dc.subjectGOVERNMENT REVENUE
dc.subjectGOVERNMENT REVENUES
dc.subjectGOVERNMENT SPENDING
dc.subjectHOLDING
dc.subjectHOUSEHOLD INCOME
dc.subjectHOUSEHOLD SAVING
dc.subjectHOUSING
dc.subjectHUMAN CAPITAL
dc.subjectINCOME INEQUALITY
dc.subjectINDEBTEDNESS
dc.subjectINFLATION
dc.subjectINFLATIONARY PRESSURES
dc.subjectINFORMATION SYSTEM
dc.subjectINFRASTRUCTURE INVESTMENT
dc.subjectINFRASTRUCTURE INVESTMENTS
dc.subjectINSURANCE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATE SPREADS
dc.subjectINTEREST RATES
dc.subjectINTERGOVERNMENTAL FISCAL RELATIONS
dc.subjectINTERGOVERNMENTAL TRANSFER
dc.subjectINTERGOVERNMENTAL TRANSFERS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL CREDIT
dc.subjectINTERNATIONAL MARKET
dc.subjectINTERNATIONAL TRADE
dc.subjectINVESTING
dc.subjectINVESTMENT CLIMATE
dc.subjectINVESTMENT CORPORATION
dc.subjectINVESTMENT PROJECTS
dc.subjectINVESTMENT PURPOSES
dc.subjectISSUANCE
dc.subjectLABOR MARKET
dc.subjectLAND AS COLLATERAL
dc.subjectLAND VALUES
dc.subjectLEVEL OF DEBT
dc.subjectLEVEL OF GOVERNMENT
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY CONSTRAINTS
dc.subjectLOAN
dc.subjectLOAN CATEGORIES
dc.subjectLOCAL DEBT
dc.subjectLOCAL GOVERNMENT
dc.subjectLOCAL GOVERNMENT BORROWING
dc.subjectLOCAL GOVERNMENT EXPENDITURE
dc.subjectLOCAL GOVERNMENT FINANCE
dc.subjectLOCAL GOVERNMENTS
dc.subjectMACROECONOMIC EFFECTS
dc.subjectMARKET ECONOMY
dc.subjectMIGRANT LABOR
dc.subjectMONETARY FUND
dc.subjectMONETARY POLICIES
dc.subjectMONETARY POLICY
dc.subjectMORAL HAZARD
dc.subjectNATIONAL INVESTMENT
dc.subjectNEGATIVE SHOCKS
dc.subjectOFF BALANCE SHEET
dc.subjectOIL PRICES
dc.subjectOWNERSHIP STRUCTURE
dc.subjectPENSION
dc.subjectPENSION FUNDS
dc.subjectPOLICY MAKERS
dc.subjectPOLICY REFORMS
dc.subjectPOLICY RESPONSE
dc.subjectPOLITICAL ECONOMY
dc.subjectPOLITICAL STABILITY
dc.subjectPRIVATE CAPITAL
dc.subjectPRIVATE INVESTMENT
dc.subjectPROFIT OPPORTUNITIES
dc.subjectPROVINCES
dc.subjectPROVINCIAL EXPENDITURE
dc.subjectPROVINCIAL GOVERNMENTS
dc.subjectPROVINCIAL INVESTMENT
dc.subjectPROVINCIAL REVENUE
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC FINANCE
dc.subjectPUBLIC FINANCES
dc.subjectPUBLIC INVESTMENT
dc.subjectPUBLIC SECTOR SPENDING
dc.subjectRATE OF RETURN
dc.subjectREAL EXCHANGE RATE
dc.subjectREDISTRIBUTION
dc.subjectRESERVE
dc.subjectRESOURCE ALLOCATION
dc.subjectRETURN
dc.subjectRETURNS
dc.subjectREVENUE SHARING
dc.subjectREVENUE SOURCES
dc.subjectSAFETY NET
dc.subjectSOCIAL SERVICES
dc.subjectSOVEREIGN DEBT
dc.subjectSUBNATIONAL
dc.subjectSUBNATIONAL EXPENDITURES
dc.subjectSUBNATIONAL FINANCE
dc.subjectSUBNATIONAL GOVERNMENT
dc.subjectSUBNATIONAL GOVERNMENT EXPENDITURE
dc.subjectSUBNATIONAL GOVERNMENT EXPENDITURES
dc.subjectSUBNATIONAL GOVERNMENTS
dc.subjectTAX
dc.subjectTAX ADMINISTRATION
dc.subjectTAX BASE
dc.subjectTAX BASES
dc.subjectTAX INCENTIVES
dc.subjectTAX REFORM
dc.subjectTAX REFORMS
dc.subjectTAX REVENUE
dc.subjectTAX REVENUES
dc.subjectTAX SHARING
dc.subjectTAX SHARING SYSTEM
dc.subjectTAXATION
dc.subjectTOTAL GOVERNMENT EXPENDITURE
dc.subjectTOTAL GOVERNMENT EXPENDITURES
dc.subjectTOWN
dc.subjectTRADE SECTOR
dc.subjectTRANSPORT
dc.subjectTREASURY
dc.subjectTREASURY BONDS
dc.subjectWAGES
dc.titleDemystifying China’s Fiscal Stimulusen
dc.title.alternativePolicy Research Working Paper; No. 6221en
dspace.entity.typePublication
okr.date.disclosure2010-10-01
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/10/16816609/demystifying-chinas-fiscal-stimulus
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.guid838131468239668821
okr.identifier.doi10.1596/1813-9450-6221
okr.identifier.externaldocumentum000158349_20121010133343
okr.identifier.internaldocumentum16816609
okr.identifier.reportWPS6221
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/10/10/000158349_20121010133343/Rendered/PDF/wps6221.pdfen
okr.region.administrativeEast Asia and Pacific
okr.region.countryChina
okr.topicMacroeconomics and Economic Growth::Subnational Economic Development
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicBanks and Banking Reform
okr.topicEconomic Theory and Research
okr.topicPrivate Sector Development::Emerging Markets
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublication6f9860c3-5c17-54f1-92fb-9f5055cc0038
relation.isAuthorOfPublication.latestForDiscovery6f9860c3-5c17-54f1-92fb-9f5055cc0038
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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