China's Half-A-Trillion Dollar Stimulus

(CBS)  You might not pick him out of the crowd, but China's President Hu Jintao could have a big impact on American pocketbooks, reports CBS News correspondent Barry Petersen.

That's because China is going forward with a half-a-trillion-dollar stimulus package that will finance a range of infrastructure projects, from schools and subways to power plants and hospitals.

The Chinese government says that will create jobs for laborers who were laid off when factories closed as exports to the U.S. fell, a sign of China's suddenly slowing economy which for years enjoyed double digit growth.

And the stimulus could bolster confidence with China's exploding consumer class.

"So when an apartment is sold to a family, the family will spend more money buying furniture, buying construction material to further decorate the apartment," says Professor David Li, a Chinese economist.

And, here in the United States, it means continued profits for American companies like GM selling Buicks made in China.

On the other hand, America could be hurt if the Chinese divert cash away from buying U.S. bonds toward projects at home. That could drive up interest rates for Americans.

Meanwhile in Japan, individual investors are flocking back into to the stock market. They see a market down a third as a big opportunity and "Mom and Pop" investors have poured $10 billion into stocks just last month.

"Our investors are like Warren Buffet," says one Japanese analyst. "They risk their own money and now they see a chance to buy stocks at twenty-year lows."

If Asia can just keep its economies chugging along, Petersen reports, that could ease any recession in the rest of the world.

So wish Japanese investors - and China's Hu Jintao - good luck. America's financial crisis may have pulled the world down, but upbeat Asian economies might just lead the way back.

[claydowner]

China is investing in a 21st century economy. Infrastructure investments not only include power plants, schools, and hospitals but bullet trains too. The US has been living on our parents and grandparents infrastructure much of it has reached or soon will be reaching the end of its service life. Every state has a large backlog of deferred maintenance for roads, bridges, schools and other civil engineering projects like levies and damns. Some damns in New England are over 100 years old. California has levies that are old and in need of huge amounts of maintenance. Then there are ports like New Orleans that need to be modernized for the widening of the Panama Canal and increased shipping traffic. Interstate highways, bridges, airports, and Amtrac trains are old and need replacement. We are behind $1.4 trillion in maintenance costs.

We Americans had best start investing in new infrastructure including bullet trains on the east and west coasts. Our competitors in China are going to leave us behind if we do start building new infrastructure for this century. I hope President Obama is watching China and plans to take appropriate action with any stimulus bill.

[metsobitso]

CBS should report it like it is. The real economic summit was held in Sao Paulo last week. Countries like China, Russia, India and Brazil laid out their plans for economic recovery and set the stage for a new world order. In that meeting China announced that they would be selling 650 billion in US treasury bills, and investing the money in their own info structure and stimulating their own economy. On the way home from the economic summit, most ministers stopped by Washington DC where George Bush gave them advise on how to run an economy. They all agreed something had to be done.