College graduates who take jobs in central or western China will be entitled to a full refund of their tuition fees, the State Council said Wednesday.

The refunds will be paid to all graduates who find employment in towns and villages in central and western China, or in other remote areas of the country, it said.

Those who join the army will also be entitled to the payments, it said.

http://www.chinadaily.com.cn/china/2009-01/08/content_7376464.htm

Its certainly an idea that’s a lot better than straight out conscription.

I wonder why the Chinese government did not allocate enough funds in the stimulus package for the health care and education service sectors. Maybe it will be in the 2nd stimulus package.

http://www.eeo.com.cn/ens/finance_investment/2008/12/25/125035.shtml

“We won’t approve loan to such railway projects. Financial support from local governments would only be a one-off thing. Whether the project can handle repayment in future depends on its operations,” said a banking official…

I can not see how the Chinese government can buffering itself from a huge shock from the slowing of the investment/export.

The liquidity and the cash will go out on the window quickly, simply because the real cushion is the customer spending and the service sector.

I think that the future events in China will be very similar to the system change in eastern Europe.
This will be the breaking point.Eastern Europe was unable to do this kind of change due to the high level of industrialisation.But you can not save the pain of the political change.

I think part of the reason is that he comes from a management background and I come from a finance one, so what he sees as inefficiency, I tend to see as prudence. Also Huang sees the 1980’s as some sort of golden age, an idea I find flawed, since a lot of the reassertion of government control in the early 1990’s happened when a lot of the credit institutions of the 1980’s went broke.

In the case of Chinese wages, a lot of GDP growth hasn’t been put into wages, but they have been put into 1) paying off the transition from central planning to the market 2) making sure that the banks and the corporations are very well capitalized so that they can withstand economic shock and 3) building up factories so that the economic won’t collapse when everyone retires. These three items are quite costly, and so by increasing GDP, you are able to pay for these things while keeping wage growth relatively high. If you try to reduce production while keeping wages high, chances are that you will end up reducing risk reserves which makes the entire economy more vulnerable to economic shocks.

Also if supply is more than demand, the solution isn’t to cut supply but boost demand. You can do this in a number of ways, of which increasing consumption is only one of them. You can boost investment or else boost government spending.

Also the problem with land is that both in the US and in China, you end up with land being bought not at the “fair market price” but the “bubble price.” If you try to make farmers rich by selling land to developers, you end up with the same thing happening as in the United States, that wealth comes from the banking system which means that you end up with a larger crisis when everything falls apart. Also, if all else fails, peasants with land can go back to farming it. Once the peasant no longer has title to agricultural land, it’s not clear what happens to the peasant if everything falls apart.

http://online.wsj.com/article/SB122988679995424611.html?mod=rss_opinion_mainu#printMode