Economic stimulus for the 21st century

Via news.com.au:

CHINA will invest nearly $A445 billion [280 billion US dollars] in its overburdened rail system as a stimulus measure aimed at blunting the impact of the global financial crisis.

The Beijing News quoted a rail official as saying that, while the network needed extending, the massive investment was also intended to help lift the nation's economy as it suffers amid the global woes.

"New rail investment will become a shining light in efforts to push forward economic growth," railway ministry spokesman Wang Yongping said.

China's economy recorded its slowest growth in five years at 9.0 per cent in the third quarter of 2008.

The [China Daily] quoted a government policy adviser saying the plan was similar to China's successful strategy for warding off the Asian financial crisis of the late 1990s.

"In 1997, we dealt with the Asian financial crisis by stimulating domestic economic growth through investment in the construction of highways," Zheng Xinli said.

"This time the money will go to improving the rail network."

Only in China would a 9% quarterly growth rate raise concerns about recession. Anyhow, it looks increasingly likely that the US will pass its own economic stimulus, with a focus on infrastructure investments, sometime in the next couple of weeks. The multi-billion dollar question is whether we'll piss it away on highways (which work about as well as subprime mortgages), or put it to productive use in building useful transit and railroad networks.