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According to Reuters, the 3 trillion yuan focus on infrastructure is divided into two parts:
1. Road and bridge infrastructure. These include railways, roads and airports.
2. Education and medical infrastructure. These include schools, hospitals and care institutions.
Us media say that $3 trillion is directly invested in infrastructure and 1.6 trillion dollars spent to help citizens are two completely different concepts.
The latter can only provide temporary relief to those affected by the epidemic, while the former can provide impetus for the global economic recovery.
Analysts at Barclays predict that $3000bn in infrastructure investment will provide 63-1 million non-farm jobs in the US and stimulate strong global economic growth of 6.4 per cent in 2021.
According to US media reports, the 3 trillion yuan heavy road and bridge infrastructure part is expected to be unanimously approved by bipartisan support, while the education and health care infrastructure part is still in doubt.
White House Press Secretary Jane Psaki confirmed that the 3 trillion yuan infrastructure plan will be voted on in two parts.
What is certain, however, is that the 2022 US budget will not limit spending growth as in the past, and the US government will invest heavily in infrastructure, which is expected to lead to lower US bond yields, higher global inflation and soaring commodity prices.
As the closest economy to and most closely linked to the US economy, Canada is greatly encouraged by the US $3 trillion infrastructure plan.
On March 30th, though, Canada’s finance minister hinted that the budget deficit authority to be issued on April 19th would reach C $635 billion.
But encouraged by the good news, Canadian Housing Investment Minister Ahmed Hussen said the Canadian government would not consider any tax on real estate transactions in 2021.
Ahmed Hussen stressed that everyone no longer has to worry about the Canadian real estate market, and the government will not discuss this issue again this year.
Because just last week, the Toronto Real Estate Board (TRREB), which has the largest number of registered real estate agents, just called on real estate bureaus across Canada to unite against new or higher taxes on real estate transactions.
But the commitment of Canadian cabinet ministers means that the federal government’s plan to balance its budget by harvesting the real estate market is temporarily in disarray.
Canadian home sellers no longer have to worry about being subject to a “capital gains tax”. Buyers and sellers of Canadian real estate do not have to worry that the government will impose any tax on home equity.
This is extremely good news for Canadian house prices.
Canadian media pointed out that $1 trillion of the $3 trillion infrastructure plan in the United States has been clearly used to build roads, bridges, railways, ports, electric vehicle charging stations, improve the power grid and other power industry facilities.
Canada should invest the same proportion of money in these infrastructure projects if it plans to have a deficit of C $635 billion, while roads, bridges, railways, ports, electric car charging stations, improvements to the power grid and other power industry facilities are directly or indirectly good for real estate.
The inflation that may be caused by the 3 trillion yuan infrastructure plan in the United States will also objectively stimulate people to buy homes, because real estate is the best tool to resist inflation.
Once the details of the $3 trillion infrastructure plan are released by the United States on March 31, Canada will be able to figure out how much it can benefit from American infrastructure, and Canada’s infrastructure boom will soon hit the road.
It remains to be seen whether Canada will repeat the rise in domestic house prices from 2008 to 2021 in a very similar context.