According to a report by China's National Development and Reform Commission and the Academy of Macroeconomic Research the country wasted nearly $6.8 trillion dollars in investment money (as cited in Business Insider ). Half of the investment money between 2009 and 2013 was wasted in ineffective construction projects that were supposed to improve the nation’s infrastructure to spur growth. A sign of major corruption or just mismanagement? Low interest rates can spur all types of investments and these are beneficial for national growth. There is always a cost with such stimulus if infrastructure investments in the provinces don't actually lead to growth or simply don't have a return on their investment. Local government makes decisions on where and how to spend resources but continued poor investments can damage growth. As with any large project it is possible that money is not spent in the most effective places to obtain a significant return on investment.
Showing posts with the label Chinese stimulus