Beijing to pump 4tn yuan ($586 billion) into economy to offset fall in exports

[seemslikeadream]

http://www.guardian.co.uk/world/2008/nov/10/china-credit-crunch

China has announced a 4tn yuan (£375bn) stimulus package to shore up its economy. The size of the injection - which amounts to a sixth of the country's gross domestic product last year, according to official figures - is an indication of the government's alarm at evidence that growth is slowing dramatically in the world's fourth-largest economy.

China is anxious to boost domestic demand to offset a sharp fall in exports and so safeguard social stability.

President Hu Jintao recently described global conditions as "grim", while the country's premier, Wen Jiabao, warned that this year would be "the worst in recent times".

The package, announced by the state council, China's cabinet, yesterday after a meeting on Wednesday, will finance programmes in infrastructure and social welfare over the next two years. Priorities include low-cost housing, environmental projects and rebuilding in Sichuan after May's earthquake. The government will also loosen credit conditions and introduce a value-added tax reform predicted to slash industry costs by 120bn yuan.

The state news agency, Xinhua, did not say how the extra spending would be financed, but the government enjoys a large budget surplus.

Economic growth slowed sharply in the third quarter, to 9%, far below last year's 11.9% and the lowest level in five years. The International Monetary Fund cut its forecast for China's growth next year to 8.5% at the weekend, and several banks are forecasting it will fall below the level of 8% needed to create enough jobs to absorb extra entrants into the workforce.




http://online.wsj.com/article/SB122623724868611327.html?mod=special_page_campaign2008_mostpop