Stimulus Plan

Let´s focus on the important issues facing China in 2008 and its role in the global financial crisis.

After starting 2008, China had a great growth rate. Firstly, it was believed that China was immune, but as banks began to collapse in the United States and Europe, China rapidly got involved in the financial issue.  

How was it possible?

When Europe and the United States fell into the credit crisis, the demand for Chinese exports decreased on a large scale. This lack in the demand from abroad led to factory cessations which meant  a great quantity of job losses.

The Chinese government had to change its habits, China needed to focus on keeping its economy growing and on the increasing general social discomfort due to the rising unemployment.  China had to project in 2009 a minimum growth of 7 or 8 percent to provide jobs for the approximately 20 million people that annually enter its workforce and for the unemployed people.

Concretely, between 2007 and 2009, China´s exports dropped more or less 16%, that led to 23 million workers who were laid-off. The good news were that 98% easily found job as the economy started to recover. The strategy was to create employment thought fiscal plans as an attempt to minimize the impact of the global financial crisis.

The State Council of the People's Republic of China announced  a stimulus package that was an economic stimulus plan.  This economic plan was a success, therefore The World Bank afterward recommended similar public works to western governments that have experienced the effects of the financial crisis. But the United States and the European Union decided to apply long-term policies.