As usual, the FT goes to the heart of this and what the underlying goal of the stimulus package should be:

After the co-ordinated rate cut in October, the Chinese cut interest rates in a show of solidarity. Now the rest of the world is talking about fiscal stimulus, and China is charging ahead. The State Council has announced a vast fiscal stimulus programme to pull China through the coming grim years. The stimulus, however, is taking the wrong form. Rather than trying to prop up the Chinese economy as it was, this is an opportunity to turn it into the economy China wants – one where consumption at home has more than a cameo role. The government must seize it.

The Chinese government recognises that it must build domestic consumer demand, but it is time for the leadership to put its money where its mouth is. Alas, the planned stimulus does not attempt to boost public and private consumption. It aims, instead, to keep the economy ticking over until it can start exporting again. This will not work. This is the golden opportunity to redirect the pattern of growth towards consumption and away from the previous massive reliance on exports and investment.

Interesting that the same commentary could have been (and was, come to think of it) written a few years ago. Recall that many economists were calling for an increase in public consumption as a way to stimulate domestic demand as a partial solution to the trade deficit and currency valuation problem. Now we have another, even better, reason for public sector spending.

I have a whole Inbox full of articles on this subject. Instead of putting together a comprehensive post (those never seem to get written), I think I will tackle this on more of an ad hoc basis.