China stimulus II: This time it’s regional

Elliot Wilson
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China’s $600 billion 2008 pump-priming of the economy was centrally orchestrated. A 2012 version, driven by local Communist Party mandarins, risks throwing even more vast sums into vacuous and wasteful projects. The central powers don’t seem to share their zeal.

Wearing a wrenching slowdown in the world’s second-largest economy, Beijing has again reached into its box of tricks, searching for a bit of magic. Alas, all it seems to have found is the same dusty old plan it concocted four years ago: a budget-busting stimulus package designed to boost a flagging economy artificially buttressed by cheap credit and industrial overcapacity.

Unlike Beijing’s first, initially lauded, shot at pump-priming in December 2008, which diverted $600 billion from state banks into new high-speed rail lines and highways, the second has attracted a mix of bafflement and derision.

In late August, province-level Chinese Communist Party officials lined up to announce their own spending sprees. Tianjin, a big city in the northeast, broke first, issuing plans to pump Rmb1.5 trillion ($240 billion) into everything from aerospace equipment to electric cars. Chongqing in the southwest, a big municipality governed until recently...