Oops, No New China Stimulus

Something is not right here:

China targets 8% growth despite crisis: (courtesy of FT) Apparently China will not increase its deficit spending. Wen says that China will meet its 8% growth target based on the previous stimulus initiatives. Plus, the Chinese are sending peaceful overtures to Taiwan, while significantly increasing military spending.

What am I not seeing? I know the world leaders have been waiting on Obama to save the American economy, remembering the countless times the American industrial/financial machine has buoyed the world economy. Yet, at the same time, how could anyone see the Recovery Act as a sign of improvement? Plus, Geithner and Bernanke are warning of further catastrophe, even though the banking industry has shown increased signs of stability.

I think back to Spring 2007 when the housing market began its collapse, and the regulators and financial industry leaders thought everything would be contained. Contagion spread as the derivatives house of cards collapsed, and now the economy is in a mild depression. Worldwide, the problems are more severe as half of Europe faces national defaults. Russia is not even a country any more (well, maybe that's a little harsh, but it is certainly teetering on the brink of dissolution). China increasingly relies on its military army and its army of police to tamp down unrest. Et cetera.

I guess I just don't understand how the leaders of China, Canada, France, and Germany are failing to see the urgency to take action rather than wait for America to get straightened out. Maybe I'm wrong and Rome isn't burning. Yet, somehow, it would not surprise me at all to learn that the world is led by a coterie of Neros.

Back to China. Much of their allocated spending will be directed internally. Building schools and supporting local industry. In my estimation, this is exactly what China should be doing right now. It corrects global imbalances while putting inland Chinese to work. But is it enough? Maybe the question, and the answer, is whether China can do more.