China announced a 4-trillion yuan ($586-billion) stimulus plan to spur expansion in the world's fourth-largest economy, helping sustain global growth as the US, Europe and Japan teeter on the brink of recession.
The funds, equivalent to almost a fifth of China's $3.3 trillion gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said on Sunday on its Web site. China will adopt a "pro-active fiscal policy'' and pursue a "moderately loose'' monetary policy, it said. "We have long-awaited this stimulus plan,'' said Ken Peng, an economist at Citigroup Inc. in Shanghai. "The measures may stimulate domestic demand, but they won't prevent China's economy from slowing further as the global economy is certainly in a recession.'' China is taking steps to bolster its economy, the biggest contributor to global expansion, less than a week before Premier Wen Jiabao goes to Washington for talks with world leaders on ways to address the economic slump. People's Bank of China governor Zhou Xiaochuan said on Saturday that boosting spending at home is the best way China can help. China accounted for 27% of global economic growth last financial year. The package announced on Sunday, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports, the State Council said. The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan. In addition, grain purchase prices and subsidies for farmers will be raised, as will allowances for low-income urban households. The government also scrapped loan quotas to help boost lending to small businesses. The stimulus plan may boost China's economic growth by 2 percentage points next year, said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. UBS AG and Credit Suisse AG before Sunday's announcement forecast expansion of no more than 7.5% for next year, which would be the slowest in nearly two decades. -Bloomberg "Some cause happiness wherever they go; others whenever they go." - Oscar Wilde --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
